While the stock market is repleted with favoritism for short-term focus over long-term growth, that mentality is not without merit. In most cases, management teams are driven by their concern with the stock price to sacrifice long term investment, tunnel-visioning on the current quarter’s P&L. For those that believe in good ol’ fashioned long-term investment still, Expedia (NASDAQ:$EXPE) is still a top contender.
When CEO of Expedia Dara Khosrowshahi made his move to Uber, the general consensus was that Expedia’s stock would suffer. The 7% decline that happened over the new few days, nonetheless, seems a bit overdone.
An evident characteristic since the recovery from the recession, “experience” purchases such as vacations have been slowly, but steadily chosen over traditional retail. That’s probably why, once the initial shock weaned off, Expedia stock recovered.
But, in the last couple of days, Expedia stock dropped again. There are 2 reasons why this happened.
One is that its competitor, Trivago (NASDAQ:$ TRVG) issued a profit warning this morning. The other is undeniably the destructive effect of Hurricane Irma on the travel industry. The impulse move by investors to either of these situations often comes from habit rather than rationality. Specifically, Trivago and Expedia’s business models are completely different, others have even argued that if the price aggregation and referral model of Trivago is underperforming, that is beneficial for Expedia.
Either way, whatever the unavoidable short term pullback is for Expedia, the company will recover once again, as shown in the past, due to its stronger long-term trends.
Featured Image: twitter
