Expedia After the Pullback: Raised Guidance Meets a Cheaper Tape

Expedia (EXPE) is doing the frustrating thing good stocks sometimes do: it executes, the fundamentals improve, and the chart still punishes late buyers. Shares closed at $271.14 on 01/23/2026, down 8.52% from the prior close, and now sit meaningfully below the early-January high of $303.80 (01/09/2026). In other words, the market is offering a second look after what was a very real reset in price.

My stance is straightforward: this pullback is attractive if you treat it like a trade, not a marriage. Expedia’s recent results and raised guidance (highlighted in coverage following its earnings surge) point to a business that’s compounding bookings and widening profitability. Meanwhile, valuation is no longer stretched relative to its cash generation. The tape is currently weak, but it’s also drifting into a zone where a mid-term rebound trade can make sense with defined risk.

The goal here is to structure a long idea that benefits from a normalization of sentiment and a technical mean reversion, while respecting that travel stocks can go from “cheap” to “cheaper” quickly if demand wobbles.

Trade Direction: Long

What Expedia does (and why the market cares)

Expedia Group is a scaled online travel platform. It sells travel products and services across three buckets:

• B2C - consumer travel brands offering travel and advertising services worldwide.
• B2B - travel and non-travel partners (airlines, offline agents, online retailers, corporate travel management, financial institutions).
• Trivago - hotel metasearch advertising revenue driven by referrals.

The market cares about Expedia for one main reason: it sits at the intersection of consumer discretionary demand and advertising/marketplace economics. When travel demand is healthy, gross bookings rise, take rates tend to behave, and marketing spend becomes more efficient. That can produce operating leverage quickly, which is exactly what you want to see after a period of heavy investment.

We also have a clean tell from recent coverage: Expedia delivered strong Q3 results with 9% revenue growth, 12% gross bookings growth, and expanded profit margins, and management raised guidance. That combination typically doesn’t belong to a stock that stays pinned down forever, unless the market believes the improvement is temporary.

The numbers that matter right now

At the current quote, Expedia is a large-cap travel name with a market cap around $33.22B. The stock also trades with enough liquidity for clean entries and exits: average volume is roughly 1.6M shares, with the last session at 1.56M.

Here’s the valuation snapshot that frames why this pullback is interesting:

Two more metrics shape the “quality” debate. First, Expedia is producing solid returns on assets (ROA ~5.53%). Second, the balance sheet is levered: debt-to-equity ~4.65, with a current ratio ~0.66. That leverage is not automatically bad for this model, but it does mean the stock can trade with more macro sensitivity when markets get defensive.

Why I think the market is mispricing the setup

The selloff is happening while the business narrative is still constructive: strong bookings growth, expanding margins, and guidance raised. When a stock drops anyway, you typically have one of two things:

• The market is front-running a demand slowdown.
• The market is de-risking valuation and momentum after a strong run.

Given EXPE printed a 52-week high just two weeks before the 01/23 selloff, I lean toward the second explanation. The stock was extended, then sentiment cooled. That’s not a fundamental break, it’s positioning and expectations resetting. If the company continues to execute, the burden of proof shifts back onto the bears.

Another underappreciated factor: short interest is meaningful. As of 12/31/2025, short interest was 6,979,239 shares with 5.13 days to cover. That’s not extreme, but it’s enough to add fuel if the stock starts reclaiming key levels and shorts have to reduce into a rebound.

Technical backdrop (what the chart is saying)

Technicals are currently not pretty, which is exactly why I’m approaching this as a setup, not a blind buy.

• Price $271.14 is below the 10-day SMA $285.25 and 20-day SMA $287.49.
• Price is roughly in line with the 50-day SMA $274.27 and slightly below it.
• RSI ~42.7 suggests cooling momentum, not a euphoric top.
• MACD is in bearish momentum (histogram negative), consistent with a pullback phase.

So what’s the opportunity? A stock with improving fundamentals often gives you one of two “buyable” moments: the breakout to new highs, or the pullback into support where risk can be defined. We are closer to the second moment now.

Valuation: attractive, but not in the lazy way

Calling Expedia “cheap” on P/E alone would be a stretch at ~23.9x. But the better lens here is cash generation. A ~11.2x price-to-free-cash-flow multiple against $2.958B of free cash flow is the reason this pullback grabs my attention. If the company’s margin expansion is real (as recent coverage suggests), the market tends to eventually reward that with a firmer multiple.

The other valuation detail is psychological: the stock has already shown the market it can support prices over $300. That doesn’t guarantee a retest, but it creates a natural target zone for a rebound trade if sentiment stabilizes.

Catalysts (what could push the next leg higher)

• Follow-through from raised guidance - if management’s higher outlook proves conservative, estimates drift higher and the multiple debate changes.
• Rebound in U.S. demand narrative - improving U.S. travel demand (as referenced in recent commentary) is particularly supportive given the market’s sensitivity to domestic discretionary spending.
• Multiple expansion via cash flow - if free cash flow remains strong, the market often stops anchoring on P/E and starts paying for durability.
• Short covering - with ~5 days to cover, a decisive reclaim of moving averages can create mechanical buying.
• Sector sympathy - news pressure on other travel platforms can sometimes rotate investors toward scaled incumbents perceived as steadier operators.

The trade plan (actionable)

I want a trade that respects the current downtrend while giving the stock room to breathe. That means using a triggered entry instead of trying to knife-catch every red candle.

Time horizon: mid term (45 trading days). That’s long enough for EXPE to potentially reclaim key moving averages and work back toward the prior high zone, but short enough that we’re not pretending we can forecast the full travel cycle.

• Entry: $276.80
• Target: $301.00
• Stop loss: $263.50

How I’d manage it:

• If EXPE reclaims $276.80, it’s back above the 50-day area and starts the process of repairing the trend.
• First friction overhead is the 9-day/10-day zone (EMA ~$281.16, SMA10 ~$285.25). If it can’t hold above those on a bounce, the trade may be early.
• The stop at $263.50 is my line in the sand: if the stock loses that level, the pullback is turning into a deeper correction and the risk-reward changes.
• The target at $301.00 sits just under the $303.80 high. I prefer that because prior highs often attract profit-taking before the actual number is touched.

Counterargument (the cleanest way this goes wrong)

The bearish case is not complicated: the market is sniffing out softer travel demand, and Expedia’s raised guidance ends up looking like a high-water mark instead of a new baseline. If that happens, the stock can stay below the 20-day and 10-day averages for weeks and grind lower, regardless of what looks like a “reasonable” multiple today.

There’s also a more technical counterpoint: with MACD still bearish and price under the 20-day/10-day, you could argue the higher-probability move is another leg down before any durable bottom forms. That’s why I’m insisting on an entry tied to a reclaim level rather than buying weakness blindly.

Risks to respect

• Demand sensitivity: Travel is discretionary. If U.S. consumer spending softens, bookings and advertising efficiency can deteriorate quickly.
• Leverage and liquidity optics: Debt-to-equity is high (~4.65) and the current ratio is low (~0.66). In a risk-off tape, the market often penalizes levered balance sheets.
• Technical downtrend risk: EXPE is below its 10-day and 20-day averages, with bearish MACD momentum. A bounce can fail and turn into a continuation lower.
• Competitive intensity: Online travel is crowded. Aggressive discounting or higher traffic acquisition costs can pressure margins even when gross bookings grow.
• Headline risk in the sector: Regulatory and competitive headlines (like the recent probe into Trip.com in China) can spill over into travel sentiment broadly, even if Expedia isn’t directly involved.

Conclusion: a buyable pullback, but only with a trigger

I like Expedia here because the story and the price are moving in opposite directions. The company is associated with strong results, raised guidance, and improving demand commentary, yet the stock has pulled back to a level where valuation looks more forgiving on cash flow (~11.2x price-to-free-cash-flow) and the chart is closer to support than to euphoria.

My stance is bullish with conditions. I want EXPE above $276.80 to validate the bounce and improve the odds that momentum is shifting. The upside target is $301.00 over a mid term (45 trading days) window, and I’m out if it breaks $263.50.

What would change my mind: if EXPE fails to reclaim and hold above the 50-day zone and instead starts making lower lows (a clear trend deterioration), I’d step aside. Likewise, if price action stays heavy while volume expands on down days, that’s usually the market telling you the “valuation support” narrative isn’t enough.