Morgan Stanley Downgrades Expedia to Underweight Amid User Growth Concerns
On September 16, Morgan Stanley downgraded Expedia Group (NASDAQ:EXPE) from Equal Weight to Underweight with a $235 price target. The downgrade was led by analyst Matthew Cost, who highlighted that Expedia's monthly active users remained flat in Q2 compared to rivals like Booking.com and Airbnb, which saw 6% and 10% growth respectively. This stagnation is concerning as marketing costs are high for user acquisition, while competitors attract new customers more effectively. Expedia’s total gross bookings grew by 12%, driven largely by its business-to-business segment, which reported a 21% increase in bookings and 23% revenue growth. The company also raised full-year guidance based on this performance. Despite these positives, Morgan Stanley argues that the user gap is central to Expedia's challenges as it faces higher costs for winning bookings compared to rivals. The stock has declined since the downgrade was announced. While other analysts like those at Evercore ISI and Oppenheimer have raised their views post-Q2 results, Morgan Stanley remains cautious unless consumer booking growth accelerates or user metrics improve.
Topics: Expedia Morgan Stanley Stock Rating Downgrade User Growth