I am looking at the charts today and I am seeing incredible prices for BKNG and EXPE shares. Why in the world would anyone hand over almost $2,000 for BKNG stock, at this point? Shares of EXPE running above $100? Why?
Remember, this was the price tag for BKNG stock back before COVID-19 ruined tourism industry, before millions in tourism industry lost their jobs and at a point when Booking Holdings reported gross travel bookings of $20.7 billion (that was Q4-2019) on February 26.
Right after Booking Holdings reported 4th Quarter and Full-Year 2019 financial results we saw a huge market-wide selloff due to coronavirus.
On August 6, 2020 Booking Holdings reported 2nd Quarter 2020 results, which were disappointing to say the least;$2.3 billion, a decrease of 91% over a year ago
(approximately a 91% decrease on a constant-currency basis). Wow. And guess what? BKNG stock was already half way up towards a total recovery from its lowest March (and 52 week) values.
Back in April I told you that travel meltdown was the best thing to ever happen to you financially and suggested that you should invest in EXPE and BKNG (back then). Back then you were able to buy BKNG stock at $1,230 and EXPE for $48. If you bought back then and sold today, that is more than 100% profit on EXPE and some 80% on top of your BKNG investment.
If you are one of the investors buying EXPE or BKNG today, you gotta be crazy. Here is why. I am sure execs from both Booking.com and Expedia thought how Q3 will be a game changer and gross booking will be at least 50% compared to 2019 Q3.
“We have witnessed improvement in booking trends since April, which is
encouraging” said a month ago Mr.Glenn Fogel, CEO of Booking Holdings.
But guess what, they are not telling you everything, because second part of July saw a huge drop in bookings and searches across the U.S. We know the reason. The biggest summer destinations (Alabama and Florida’s Gulf Coast) saw a huge interest in June, but then Florida’s coronavirus cases tripled in July and deaths nearly doubled. Who wants to travel surrounded by death?
August wasn’t better compared to July, actually it was probably even worse. Traditionally booking and searches fall down rapidly after August 15th and I am sure COVID did not change this to better.
Here is another thing you should think about, especially if you are EXPE investor. Expedia is primarily focused at the U.S. market, meaning that nothing good will come out of the Q3 report. At least in my eyes.
Regarding Booking Holdings stock- They are not as dependent on the U.S. market as Expedia is and some markets bounced back better than others so I am sure they had good amount of bookings during Q3, but nothing that could make me pay $1,950 for one BKNG share.
Maybe I am too pessimistic, maybe people do not care about the virus anymore and they want to go back to doing business as usual, maybe business travel will push the numbers up now that summer is nearing its end….maybe….
Here is one positive news for the end. September 3rd saw the biggest total airline traveler throughput numbers since March 17. But still, 877,698 passengers in a day is only one 3rd compared to the same day in 2019.