Stellar travel demand, benefits from deploying AI (Artificial Intelligence) tools, and integrating OpenAI’s ChatGPT into its iOS experience led Expedia (NASDAQ: EXPE) to deliver strong Q1 revenues. Following the first quarter results, EXPE stock is up about 6.26% in after-hours trade.
Expedia delivered revenues of $2.67 billion, up 18% year-over-year. This came roughly in line with the Street’s forecast. The company said that Q1 saw stellar travel demand, led by an increase in international and major city travel. Moreover, the reopening in Asia contributed to this growth.
Expedia’s CEO, Peter Kern, said that the company is using AI and machine learning to enhance consumers’ search experiences and quickly address issues. He added that this enhanced the company’s performance.
The company witnessed record lodging bookings of $21.1 billion. Meanwhile, the strength in app usage and loyalty member counts continued in Q1.
At the same time, the company, which leverages its tech-based platform to offer travel-related solutions, managed to trim losses. It delivered an adjusted loss per share of $0.20, up from the loss of $0.47 per share in the prior year’s quarter. However, it missed the analysts’ earnings estimate of $0.02 per share.
Thanks to the strong demand, EXPE delivered a record free cash flow of $2.9 billion. Moreover, the company has repurchased $600 million worth of shares year-to-date.
The company reiterated its full-year sales guidance and expects its top line to increase at a double-digit rate. However, tough year-over-year comparisons could weigh on its short-term growth.
Is EXPE Stock a Buy, Sell, or Hold?
EXPE expects strong demand and growth initiatives to support its financial performance in 2023. However, the anticipated moderation in its growth in the short term due to the tough year-over-year comparisons keeps analysts cautiously optimistic about Expedia.
EXPE stock has nine Buy, 13 Hold, and one Sell recommendations for a Moderate Buy consensus rating. Analysts’ average price target of $126.91 implies 42.32% upside potential.
