Chris and Oliver also discussed the big announcement from the Biden administration that lifts travel restrictions from foreign travelers in November if they are fully vaccinated and have a negative COVID test. This is a big first step in reopening international travel and the travel sector was one of the few bright spots on a sea of red in the markets.
Expedia has done a great job with a plan of cutting close to a billion dollars from its cost structure and this will provide huge leverage to the bottom line when demand returns. Street analysts are forecasting a return to 2019 profitability in 2022 and close to a double in profits in 2023.
Investors are also not fully recognizing Expedia's fast growing VRBO, alternative accommodation asset. It is a fierce competitor to Airbnb; however, Airbnb has a market cap of over $100 billion vs Expedia just $23 billion. Management could unlock value by spinning out VRBO or using a tracking stock to unlock the full value of VRBO.
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Are you worried about Evergrande and the impact on the US stock market?
By Chris Wang