Travel Stock Under Pressure: Expedia Group Inc (NASDAQ: EXPE)

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Expedia Group Inc (NASDAQ: EXPE) stock fell over 0.6% in the pre-market session of Feb 12th, 2021 (Source: Google finance) as the company posted lower than expected results for the fourth quarter of 2020. For the fourth quarter of 2020, total gross bookings declined 67%. The declines across the lodging, air and other travel products were broadly in-line with the third quarter. The gross booking declines had worsened in November with the onset of a new wave of COVID-19 cases, before moderating slightly in December. Further, excluding Vrbo’s merchant bookings from both periods, free cash flow was approximately negative $575 million in the fourth quarter of 2020, which is an approximately $200 million decline from the prior year primarily due to the decline in adjusted EBITDA, partly offset by lower working capital usage and a decline in capital expenditures. Cash, cash equivalents and short-term investments has decreased to $3.4 billion at December 31, 2020 compared to $4.4 billion at September 30, 2020. The decline was due to the repayment of the remaining $650 million outstanding on the revolving credit facility and negative free cash flow.

EXPE in the fourth quarter of FY 20 has reported the adjusted loss per share of $2.64, missing the analysts’ estimates for the adjusted loss per share of $1.97. The company had reported 67 percent fall in the adjusted revenue to $920,000,000 in the fourth quarter of FY 20, missing the analysts’ estimates for revenue of $1,120,000,000. As a percentage of total worldwide revenue in the fourth quarter of 2020, lodging accounted for 86%, advertising and media accounted for 9%, air accounted for 4% and all other revenues accounted for the remaining 1%.

Lodging revenue fell 58% in the fourth quarter of 2020 due to a 61% decrease in room nights stayed, partly offset by a 6% increase in revenue per room night. Revenue per room night benefited from an increase in the percentage of room nights contributed by Vrbo, which has a higher revenue per room night than the rest of our lodging business as well as transaction revenue related to Vrbo’s transition to merchant of record. Air revenue fell 80% in the fourth quarter of 2020 due to a 69% decline in tickets sold and a 35% decline in revenue per ticket. The decline in revenue per ticket was mainly related to a shift in product mix. Advertising and media revenue fell 66% in the fourth quarter of 2020 due to declines at trivago and Expedia Group Media Solutions.

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