1. Expedia Group, Inc. (NASDAQ:EXPE)
Number of Hedge Fund Holders: 88
Expedia Group, Inc. (NASDAQ:EXPE) is a Washington-based online travel company operating in the United States and internationally. Inflation has impacted travel stocks considerably, as most people cut down on travel expenses to fulfill their basic needs. Expedia Group, Inc. (NASDAQ:EXPE) stock has shed more than 41% in value year to date as of August 10.
On August 5, Mizuho analyst James Lee slashed the price target on Expedia Group, Inc. (NASDAQ:EXPE) to $132 from $172 and reiterated a Neutral rating on the shares after the Q2 results. EBITDA exceeded expectations notably, indicating the operating leverage of the online travel agency model, the analyst told investors. However, July lodging bookings growth was five points less than June. The analyst is focused on fiscal 2023 and macro uncertainties that could lead consumers to trade down or cut spending on travel.
According to Insider Monkey’s data, 88 hedge funds were bullish on Expedia Group, Inc. (NASDAQ:EXPE) at the end of March 2022, compared to 82 funds in the last quarter. Daniel Sundheim’s D1 Capital Partners is the biggest stakeholder of the company, with 7.6 million shares worth about $1.5 billion.
Here is what Artisan Global Value Fund has to say about Expedia Group Inc. (NASDAQ:EXPE) in its Q2 2022 investor letter:
“Expedia declined 52% during the quarter due to concerns a consumer recession will reduce spending on discretionary items like travel, as well as concerns that the company is losing market share to other online travel agencies. While the fears of a potential recession are real, the current environment is actually pretty good. This summer will be one of the busiest travel seasons. As recently as June, Expedia’s management signaled it had yet to see any signs of a slowdown. It could certainly happen, but it has not yet.
Recent results, while strong, did show a slower recovery compared to peers. Part of the shortfall in performance is explained by mix. The other part is due to the company’s decision to restructure its business during the pandemic. Over the past two years, Expedia made significant changes to improve structural profitability by cutting off unprofitable partners, geographies and marketing channels. The business is somewhat smaller but should be stronger and far more profitable than it was prior to the pandemic.
Benefits from Expedia’s improvements are already visible and should continue into next year as they are fully implemented. The improvements should help the company shift to a less transactional business model that creates more durable relationships with customers and drives good profit growth into 2023. The company announced unit economics had already improved and plans to provide new disclosures allowing investors to track the performance of its improvements.
Expedia’s shares are now trading around the same level as during the middle of the pandemic. It is hard to imagine any recessionary scenario that could equal the middle of COVID-19 when travel was essentially non-existent. Looking through this, we estimate normal earnings power in the $11-$12 per share range, which puts the shares at 7X-8X normal earnings.”
You can also take a look at 10 Best Dividend Stocks to Buy in 2022 and 10 Best Cyclical Stocks for Inflation.
