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Feb. 25, 2021, 8:06 a.m. EST

Booking’s stock gains despite continued erosion of the online-travel business

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By Jeremy C. Owens

Booking Holdings Inc.’s business continued to struggle in the face of the COVID-19 pandemic at the end of 2020, but held up better than analysts expected.

Booking /zigman2/quotes/203576210/composite BKNG +2.64% , which was known as Priceline before changing its corporate name to one of its other online-travel brands, reported fourth-quarter losses Wednesday of $165 million, or $4.02 a share, down from a profit of $27.75 a share in the same quarter a year ago. Sales declined to $1.24 billion from $3.34 billion in the holiday season of 2019.

After adjusting for certain tax impacts and other costs, Booking reported a loss of 57 cents a share, down from adjusted earnings of $23.30 a share a year before. Analysts on average expected adjusted losses of $4.28 a share on sales of $1.2 billion, according to FactSet. Shares gained about 2% in after-hours trading after the results were released.

The travel industry has been slammed during the COVID-19 pandemic, and the decline worsened in the final quarter of the year as the coronavirus caused more lockdowns. Chief Executive Glenn Fogel sounded a hopeful note in a statement with the announcement Wednesday.

“The travel environment continued to be challenging through the fourth quarter of 2020 and into January 2021 as COVID-19 case counts remained very high and travel restrictions were reimposed in many parts of the world,” Fogel said. “However, in recent weeks, we have started to see some improvements in booking trends that we will continue to monitor.”

While Booking did not provide a first-quarter forecast in Wednesday’s announcement, analysts had expected that any recovery will start farther into 2021.

“Given the likelihood of lockdowns extending into March (namely in the U.K.), we expect a reset is needed for 1H:21 Street forecasts (along with our estimates) as intra-quarter travel is stifled, though this should be in expectations to a degree,” Stifel analysts wrote in a preview of online-travel earnings earlier this month. “We believe the picture looks more favorable over a 12- to 18-month period for Booking given strong leverage to leisure travel, alternative accommodation exposure, and proven earnings power.”

Investors have largely bet on an eventual turnaround, as Booking shares have jumped more than 27% in the past month and have now gained more than 36% in the past year, as the S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.08% has increased 20.3%. Some of those gains appear pegged to the initial public offering and early trading in Airbnb Inc. /zigman2/quotes/222990650/composite ABNB +0.45% , which sells lodging in full homes instead of hotels — Booking and another rival, Expedia Group Inc. /zigman2/quotes/202291990/composite EXPE +1.65% , offer similar options in their portfolios of brands.

“A public valuation for Expedia’s alternative accommodations portfolio in the form of Airbnb would seem to suggest a significant mispricing in one direction or the other,” and “a similar argument can be made for Booking on a sum-of-the-parts basis relative to Airbnb,” Wedbush analysts wrote earlier this month while upgrading Expedia stock and increasing their Booking price target.

Airbnb, which is worth more than Booking despite being considerably smaller , is scheduled to report earnings for the first time as a public company Thursday afternoon. Airbnb shares, which sold for $68 in its December IPO, closed higher than $200 Wednesday.

/zigman2/quotes/203576210/composite
US : U.S.: Nasdaq
$ 2,467.77
+63.48 +2.64%
Volume: 554,886
April 14, 2021 1:13p
P/E Ratio
1,724
Dividend Yield
N/A
Market Cap
$98.70 billion
Rev. per Employee
$334,778
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/zigman2/quotes/210599714/realtime
US : S&P US
4,145.02
+3.43 +0.08%
Volume: 1.05B
April 14, 2021 1:15p
loading...
/zigman2/quotes/222990650/composite
US : U.S.: Nasdaq
$ 178.74
+0.79 +0.45%
Volume: 1.86M
April 14, 2021 1:15p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$108.27 billion
Rev. per Employee
$603,573
loading...
/zigman2/quotes/202291990/composite
US : U.S.: Nasdaq
$ 173.76
+2.82 +1.65%
Volume: 963,311
April 14, 2021 1:14p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$24.59 billion
Rev. per Employee
$272,199
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