Airbnb vs Expedia: which action will travel higher?

TThe global travel industry was hit last year due to the COVID-19 pandemic.

According to a US Travel Association report released earlier this year, travel spending fell 42% year-over-year to $ 679 billion last year. International and business travel spending fell sharply by 76% and 70% respectively.

Let’s compare two of these travel agencies, Airbnb and Expedia, using TipRanks Comparison of actions tool and see what Wall Street analysts think about these stocks.

Airbnb (ABNB)

Airbnb, Inc. is an online marketplace that connects hosts and guests to book travel services and accommodations around the world. Last week, the company reported strong second quarter results, boosted by the easing of travel restrictions and increased vaccinations.

Airbnb posted revenue of $ 1.33 billion, a whopping 299% year-over-year jump that topped Street’s estimate of $ 1.23 billion. The company reported a quarterly loss of $ 0.11 per share, well below the loss estimated by analysts at $ 0.48 per share and much better than the loss of $ 2.18 per share in the quarter of the year. former.

The second quarter saw significant 320% year-on-year growth in gross reservation volumes (GBV) to $ 13.42 billion, while Nights & Experiences Booked grew 197% year-on-year to 83.1 million .

That being said, Airbnb expects the third quarter to be the top revenue-generating quarter, supported by a large GBV backlog created during peak travel season. However, the company has warned that newer variants of the virus, such as the Delta variant, will continue to affect travel behaviors. (See Airbnb stock chart on TipRanks)

Additionally, ABNB said in its letter to shareholders: “As a result, year-over-year comparisons for nights and booked experiences and GBV will continue to be more volatile and non-linear.”

However, Evercore ISI analyst Mark mahaney expects “the magnitude of this deterioration may be very modest,” as the company said it “had a record number of nights booked in a day in July.”

The analyst reiterated a buy and a target price of $ 195 (up 35.5%) on the stock.

Analyst Mahaney also pointed out that the company is effectively tackling supply issues. According to the analyst, in May this year, ABNB hosted a product event, in which the company announced more than 100 updates to its core service.

These updates appear to be working, as the company indicated in its letter to shareholders that active listings in non-urban destinations in Europe and North America increased 8% quarter-on-quarter.

Interestingly, ABNB’s long-term stays, which the company defines as stays of at least 28 nights, were its “fastest growing category in terms of travel time.” Additionally, a business survey indicated that 81% of its long-term guests in the second quarter planned to book another long-term stay in the coming year.

Mahaney is of the opinion that this indicates that “the TAM of Airbnb [total addressable market] may be larger than the previously assumed leisure accommodation market.

ABNB expects its third quarter Adjusted EBITDA margin to be “significantly higher” than its FY19 third quarter margin as the company made fundamental changes to its cost structure. In the long term, Airbnb expects to achieve EBITDA margins of 30% or more.

Mahaney believes this shows that the company is reaching profitability “faster than expected”.

As for the rest of the street, the consensus is that Airbnb is a moderate buy, based on 13 buys and 8 holdbacks. The Airbnb average price target of $ 179.95 implies upside potential of around 25.1% from current levels.

Expedia Group (EXPE)

Expedia Group leverages its travel platform and technology across the company’s broad portfolio of businesses and brands, including Expedia, Hotels.com, trivago, and VacationRentals.com.

Earlier this month, the company reported mixed results for the second quarter. Revenue climbed 273% year-on-year to $ 2.11 billion, from a consensus estimate of $ 2 billion. The adjusted loss per share was $ 1.13, compared to a loss of $ 4.09 per share in the same quarter last year. However, analysts expected a loss of $ 0.65 per share in the second quarter.

While Expedia’s gross bookings jumped 667% year-on-year to $ 20.8 billion, they were down 26% from the second quarter of FY19. Wells Fargo analyst Brian Fitzgerald pointed out that EXPE’s gross bookings have not reached the high bar set by its competitor, Booking Holdings (BKNG), whose gross bookings fell only 13% compared to Q2 FY19.

However, the analyst still viewed Expedia’s progress “favorably.”

The analyst remained concerned about the “softening of demand in July” that management noted during its earnings call, due to the COVID-19 variants.

At the same time, Fitzgerald noted a few key positives for the stock, including the continued strength of EXPE’s online market for alternative housing, Vrbo. The other bright spot for the title was the company’s more balanced mix of 50% each between gross merchant and agency “vs. a 30/70 merchant / agency split for BKNG.

Company management noted during its earnings call that it has seen cancellation rates increase slightly, due to new variants of the virus, while performance marketing remains volatile. Performance marketing is online marketing where advertisers only pay if a specific action takes place. (See Expedia stock chart on TipRanks)

Expedia has decided to reduce its focus on marketing and instead focus on building the brand by providing excellent service to its customers. Analyst Fitzgerald noted that EXPE was justified in adopting this risk aversion approach “to customer acquisition / reservations given the uncertainty surrounding cancellations and EXPE’s relatively limited financial capacity; However, we will seek to ensure that EXPE does not cede too much competitive ground to BKNG as the pandemic unfolds. “

As for the rest of the street, the consensus is that Expedia is a moderate buy, based on 6 buys and 10 bookings. Expedia’s average price target of $ 184.20 implies upside potential of around 29.2% from current levels.

Final result

While analysts are cautiously bullish on both stocks, based on the upside potential over the next 12 months, Expedia appears to be a better buy.

Disclaimer: The information contained in this document is for informational purposes only. Nothing in this article should be construed as a solicitation to buy or sell securities.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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