Expedia Group‘s (EXPE.O) shares suffered a significant downturn of 18% on Friday, marking their most substantial single-day decline in nearly four years.
This plunge followed the online travel company’s announcement foreseeing a moderation in revenue growth rates for 2024, attributing it to a softening of air fares from the peak levels observed post-pandemic.
The company revealed late on Thursday that Chief Executive Officer Peter Kern would step down, with company veteran Ariane Gorin set to assume the position.
This news disrupted Expedia’s four-day winning streak and exerted downward pressure on other travel firms’ stocks, including Booking Holdings (BKNG.O), Tripadvisor (TRIP.O), and Airbnb (ABNB.O), which saw declines ranging from 1% to 4%.
“On a macro level, we expect travel demand to remain relatively healthy, but we expect growth rates across the world to decelerate,” remarked outgoing CEO Kern during Expedia’s earnings call.
Additionally, the company’s air travel revenue took a hit due to the grounding of Boeing’s 737 Max 9 fleet, resulting in numerous cancellations affecting its Vrbo brand.
Analysts at Wells Fargo commented, “Overall, we see an ‘acceleration story’ that is decelerating with a CEO transition now in play; near-term setup looks challenging.”
Expedia forecasted its gross bookings growth for the current quarter to be within the low- to mid-single digits range, with revenue growth anticipated in the mid-single digits.
CFRA analyst Siye Desta noted, “Expedia’s first-quarter guidance may have underwhelmed investors, with revenue growth expected to be in the mid-single digits range compared to the 9% consensus estimate.”
However, the company reported a better-than-expected adjusted profit of $1.72 per share, buoyed by resilient demand during the holiday season, surpassing analysts’ average expectation of $1.68 per share, according to LSEG data.
Expedia’s shares are currently trading at approximately 12.35 times their forward profit estimates, significantly lower than rival Booking’s multiple of 21.04.