Expedia Earnings: Harvesting the Fruit of Past Investments Amid Resilient Travel Demand

Expedia shares rose 10% during after-hours trading on Feb. 6, as investors cheered fourth-quarter bookings growth acceleration and strong EBITDA margin expansion. We plan to increase our $191 per share fair value estimate by a high-single-digit percentage to account for the stronger fourth-quarter results, as well as higher gross margins over our 10-year forecast. While shares were trading in 4-star territory throughout 2022-24, as Expedia faced near-term headwinds during its technology migration, shares have increased about 60% the last six months, as our long-standing view that its prudent investments would yield improving results comes to fruition. We see shares as slightly undervalued.