Actionable news
0
All posts from Actionable news
Actionable news in EXPE: Expedia, Inc.,

How Expedia Can Thrive Even After Uber Takes Its CEO

Expedia stock has quintupled in the past decade.

CEO Dara Khosrowshahi is expected to leave the company to take over as CEO at Uber.

Shares of Expedia, which has thrived under Khosrowshahi, fell sharply on the news, dropping 4.5% on Monday. (It’s apparently not a 100% done deal, but it seems highly likely. Expedia Chairman Barry Diller sent a message to employees noting that Khosrowshahi had been asked to lead Uber and “I believe it is his intention to accept.”)

Expedia investors are understandably spooked by the news, because Khosrowshahi has successfully grown the company since becoming CEO in 2005. Expedia and Priceline now control the lion’s share of the global online hotel reservation business, having bought up most of their competitors. In the past decade, Expedia shares have more than quintupled.

Still, Priceline faced similar jitters when its highly successful CEO Jeffrey Boyd left at the end of 2013. Those fears have not come to fruition: Shares have more than doubled since he left even amid continued management turmoil.

There’s reason to believe that Expedia can also thrive under new management as long as it continues to expand overseas. Expedia’s management team includes several other seasoned executives, and the company’s brands such as vacation rental site HomeAway and vacation deals site Hotwire have their own chiefs with “a fair amount of independence,” wrote SunTrust Robinson Humphrey analyst Naved Khan. “Given such a setup, we believe that the business is unlikely to see a near-term disruption in the day-to-day decision making at their respective businesses.”

Jefferies analyst Brent Thrill agrees that “fundamentally nothing changes at Expedia” if Khosrowshahi leaves.

And he sees another potential positive from the change: “In addition, Mr. Khosrowshahi moving to Uber would create an interesting opportunity for both companies to partner eventually in the medium to longer term creating value for both in the process.”

Big Picture: Expedia stock fell hard on Monday on reports its CEO is leaving, but there reasons to believe the company can continue to thrive.


More