The Reopening: Online Travel Companies

What do you mean, no direct flight to Mordor?

It has become a consensus that the demand for travel is quickly recovering to pre-pandemic levels. In our previous posts, we talked about the potential recovery of Airlines and Cruises stocks. We also expect online travel companies to benefit from increased domestic and international travel activities BUT...

The major players of the industry are Booking Holdings (BKNG) and Expedia Group (EXPE). These companies also belong to the currently unpopular Technology sector. We do not expect a significant upside for the shares of these companies this year.

The "helicopter money" from the Fed inflated valuations of the Technology sector, especially companies with business models based on online sales. The withdrawal of liquidity already started to deflate the sector and is likely to continue for the rest of 2022. The online travel companies outperformed NASDAQ 100 year-to-date due to the future benefits of reopening. However, their current PEs remain significantly higher than their historic levels, indicating a limited upside.

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This blog does not provide investment advice. Please do your own research and talk to professionals before investing.

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