Expedia Group, Inc. (EXPE) reports a profit for the fourth quarter of 2020 after the closing bell on Thursday. Analysts expect a loss of USD 1.92 per share on sales of USD 1.13 billion. When hit Earnings per share (EPS) will represent a decrease of $ 3.16 from earnings of $ 1.24 reported in the fourth quarter of 2019. The stock rose more than 4% after its release in the third quarter of November despite a 57.7% year-over-year revenue decline and added another $ 24% when Pfizer Inc. (PFE) reported positive vaccine results.
The central theses
- Expedia reports the results for the fourth quarter of 2020 after the closing bell.
- The company is expected to see another quarterly loss and revenue decline.
- The share hit a multi-year high in anticipation of a recovery in the second half of the year.
- Given the mixed travel prospects, the current price level does not appear to be sustainable.
Expedia shares are trading near a three-year high, and market participants are reloading their shares in anticipation of a recovery in the second half of the year. It seems foolhardy, however, as the pre-pandemic stock was stuck in a downtrend that was held up by customers finding better deals on airlines and hotels. These headwinds are likely to recur once vaccination treatment is complete and lost time is made up by visits to family and worldwide vacation destinations.
A December report by the aviation industry forecast that passenger numbers would remain below 2019 levels until “2024 at the earliest”, compounded by the decline in business travel. Estimates were based on a Gallup poll that only 58% of Americans would take a vaccine, but the latest poll raised that estimate to 70%. In addition, researchers now believe that 43% of Americans have had COVID-19 or have taken at least one dose of vaccine, bringing the country much closer to herd protection.
The Wall Street consensus on Expedia has upgraded to an “Overweight” rating based on 13 “Buy”, 1 “Overweight” and 15 “Hold” recommendations. An analyst recommends that shareholders close positions and step on the sidelines. Price targets Currently, they range from a low of $ 88 to a street high of $ 180, while the stock will open the session about $ 9 above the median of $ 140 on Thursday. Reward: Given this placement and the 300% advance on the March 2020 low, the risk is not favorable for a new engagement.
Tip
Toppy is a financial slang term used to describe markets that are making unsustainable highs. The term toppy can be used to describe a stock, sector, or broad market index like that S&P 500 indexThis has resulted in longer profits, but there is analyst sentiment or general market consensus that a possible reversal is imminent.
Expedia Weekly Chart (2012-2021)
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TradingView.com
The stock rose above its 2007 high of $ 35.28 in 2012 and saw a strong uptrend that hit an all-time high of $ 161 in July 2017. She dropped into the $ 120 in the first quarter of 2018 and filled in a Trade range This included price movements until a breakdown in March 2020 hit an eight-year low in the low 40s. A rally in the second quarter stalled on broken range support and mixed price action on a November breakout.
The stock has gained more than 45% since then and has taken off overbought technical measured values that favor a withdrawal. Meanwhile the rally has reached resistance at the 2019 high and above that barrier, which is within 12 points of the 2017 all time high. Given realistic forecasts of travel prospects and revenues over the next four quarters, there is little to be gained from engaging at this high level. As a result, cautious investors may want to wait for November gap between $ 106 and $ 119 to be filled.
Tip
Overbought is a term used when it is believed that a security is trading at a level above its intrinsic or fair value. Overbought generally describes the recent or short term movement in the price of the security and reflects the expectation that the market will correct the price in the near future. This belief is often the result of technical analysis the price development of the security, however Basics can also be used.
The bottom line
Expedia stock may trade at unsustainable levels after rallying more than 300% from its multi-year low in March.
Disclosure: Expedia Chairman Barry Diller is also Chairman of IAC / Interactive Corp, Investopedia’s parent company. The author held no positions in any of the above securities at the time of publication.
