Booking Holdings Stock Down 25% in 2022, What’s Next?

-6.05%
Downside
2151
Market
2021
Trefis
BKNG: Booking Holdings logo
BKNG
Booking Holdings

After a 25% decline year-to-date, at the current price of around $1788 per share, we believe Booking Holdings stock (NASDAQ: BKNG), the world’s largest online travel agency that offers services from lodging to airline tickets to car rentals, could see a rebound in the long term. BKNG stock has declined from around $2461 to $1788 since the beginning of 2022, steeper than the 20% decline in the S&P index. This stock decline can be attributed to the continuing fear about inflation, rising interest rates, record gas prices, and a possible recession. While the company’s stock price could remain pressured amidst macro concerns, it should be noted that booking trends have been positive thus far in 2022. BKNG saw record gross bookings in Q1 against the 2019 pre-pandemic quarter. In fact, the company mentioned in its first-quarter earnings call that global leisure travel trends have continued to improve in the second quarter, even with the uncertainties of the Russian invasion of Ukraine and rising inflation across the globe and that it is looking forward to a busy summer travel season ahead. All this indicating toward setting expectations of upside recovery in the stock price levels.

In Q1 2022, the company’s gross travel bookings jumped nearly 130% y-o-y to $27.3 billion, which was up 7% against Q1 2019. In addition, the number of room nights booked on the platform in Q1 2022 doubled from the prior-year quarter. Its total revenue soared 136% y-o-y to $2.7 billion, and the travel company reversed a year-ago loss with an adjusted net income of $161 million – indicating an almost full recovery. In April, room nights increased by 10% against 2019 with strength across all regions, with Asia being the only market that was still below 2019 levels. Even so, bookings in Asia have improved from -35% in Q1 2019 to down high-teens percentage in April. The company’s gross bookings also grew over 30% in April as compared to the 2019 levels. Management did not provide guidance for the second quarter but was confident that there will be an operating profit.

We forecast Booking Holdings Revenues to be $16.3 billion for the fiscal year 2022, up 49% y-o-y. Looking at the bottom line, we now forecast earnings per share (EPS) to come in at $92.11. Given the changes to our revenues and EPS forecast, we have revised Booking Holdings Valuation to $2328 per share, based on a $92.11 expected EPS and a 25.3x P/E multiple for the fiscal year 2022. That said, the company’s stock appears very cheap at the current levels, with a 32% premium from the current market price. While travel is certainly on consumers’ minds, a variety of headwinds could again start blowing, upending this stock. In such a case, it is likely that the broader markets may see lower levels in the near term. And, a further dip in BKNG stock can be used as a buying opportunity for better gains in the long run.

It is helpful to see how its peers stack up. Check out how Booking Holdings’ Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

With inflation rising and the Fed raising interest rates, Booking Holdings has fallen 25% this year. Can it drop more? See how low can BKNG stock go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

 Returns Jul 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 BKNG Return 2% -25% 22%
 S&P 500 Return 1% -20% 71%
 Trefis Multi-Strategy Portfolio 5% -23% 208%

[1] Month-to-date and year-to-date as of 7/6/2022
[2] Cumulative total returns since the end of 2016

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