Booking Holdings (NADAQ:BKNG) had an excellent run of growth in the last decade of 7x it’s 2010 market cap as internet and smartphones became the new norm. The company came into the decade looking at a promising 2020, but little did anyone know of what awaited the travel and entertainment sectors. After the coronavirus pandemic gradually spread globally through the first two months of the year, March was a rude shock for players in the business as lockdowns across the US and Europe pushed revenues down as much as 90% for the month. The stock is currently trading 29% below it’s 2020 high after recovering from being as much as 45% down.
For Q1 2020, the company is expected to post an EPS of $6.12, down $45 and revenues of $2.27 billion, down 20%.(Nasdaq)
As travel bans and lockdowns gradually lift worldwide, investors are now worried about the company’s and the entire industry’s prospects due to fears of reduced consumer spending capacity and a looming recession. Other than economic considerations, investors are also wary of the post-pandemic effects on the sector, like the effect of social distancing on travel and possible quarantine requirements post travel. It is also to be noted that the unprecedented shock felt the sector was only 1 months worth of low demand and managements of company’s across the sector expect Q2 numbers to be even worse.(Motley Fool)
Since the pandemic killed all demand, all industry players have turned to raising capital or debt to bolster liquidity and stay afloat till the sector rebounds. The company has raised about $3.2 billion in senior secured debt at 5% interest, and that was followed by a second debt issue of $750 million and a sale of one of it’s overseas investments.
Here are the fundamentals for NASDAQ:BKNG stock
The Moody’s rating on the company’s debt was A3 (Seeking Alpha). The company currently has $12 billion cash on it’s books, which ample to cover it’s 2019 operating expenses of $9.7 billion(MacroTrends). However it should be noted that the cash figure is gross, taking $9 billion debt into account, the net figure comes to $3 billion which is ample to weather the crisis. (Yahoo Finance)
Taking all factors in consideration, investors should wait to see the post-lockdown effects on the sector and demand figures in Q2. However, the stock looks like a good opportunity for investors are confident in the revival of the sector and have a long-term horizon.