Booking Holdings
has seen business slow down since the start of the Israel-Hamas war, but CEO Glenn Fogel says investors should focus on the company’s long-term story.
Booking reported third-quarter earnings and revenue that beat Wall Street estimates on Thursday evening. But on the company’s earnings call, management said it saw cancellations and a drop in new bookings starting in the second week of October after the Israel-Hamas war began.
Shares of Booking, which is the parent company of websites like Booking.com and Priceline, were flat at $2,846.96 Friday. The stock initially fell in morning trading, likely reflecting investor concerns about travel demand.
In an interview with Barron’s, Fogel highlighted Booking’s record third-quarter, and said he expects the strong travel trend to continue in the long run.
“I wish investors would not be so focused on the short term, and I wish they would look at this in a much longer term,” Fogel said. “Betting against human nature—they like to travel—is a bad bet.”
Fogel said the company has recovered from other geopolitical headwinds in the past, including the Covid-19 pandemic that practically shut down travel and the Sept. 11 terrorist attacks.
“I saw this when Russia invaded Ukraine—instantly big drop—Eastern Europe particularly. But then, you see things start to normalize,” Fogel said. “Given the assumption that hopefully there’s no further expansion [of the Israel-Hamas conflict], that would mean that we would have an eventual normalization there too.”
Booking earned $72.32 a share on revenue of $7.34 billion in the third quarter, up from per-share earnings of $53.03 and revenue of $6.05 billion in the year-ago period. The results outpaced Wall Street estimates for earnings of $67.78 a share and revenue of $7.26 billion.
Booking also said it saw record quarterly room nights, gross bookings, revenue, and net income for the period, from a strong summer travel season.
“You look at any of the numbers and they’re all very good,” Fogel said.
Booking’s solid performance is no surprise as consumers continue to spend heavily on experiences. Competitor
Expedia Group
‘s (EXPE) third-quarter results also beat expectations; its management on Thursday cited the resiliency of travel demand.
Expedia
stock surged 17% Friday, and was on pace for its largest one-day percentage increase since November 2020.
Ticketmaster parent
Live Nation Entertainment
‘s (LIVE) third-quarter earnings and revenue also crushed analysts’ forecasts, reflecting robust consumer appetite for concerts and other live entertainment.
Wedbush analyst Scott Devitt on Friday cited a number of factors that could be dragging down investor sentiment for Booking’s shares: expectations that leisure travel will peak, ongoing economic uncertainty amid elevated inflation and interest rates, and a fading pandemic recovery.
He lowered his price target on Booking stock to $3,300 from $3,450, but maintained his Outperform rating.
“While 2024 growth is uncertain given the macro backdrop, management continues to expect growth in a normalized environment will be in excess of prepandemic levels,” Devitt wrote.
Shares of Booking, which is a recent Barron’s stock pick, have gained 39% in 2023.
Write to Angela Palumbo at [email protected]
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