Why Expedia Shares Took Off

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of online travel company Expedia (NASDAQ: EXPE  ) soared 19% today after its quarterly results and outlook impressed Wall Street.

So what: The stock sank in July after a disappointing Q2, but today's Q3 results -- adjusted EPS of $1.43 beat the consensus by $0.08, while revenue jumped 17% -- coupled with an upbeat view, suggests that Expedia's recent lead-conversion issues are behind it. In fact, gross bookings increased 15% over the year-ago period, giving investors plenty of good vibes over its growth prospects going forward.

Now what: Management remains on course to deliver full-year adjusted EBITDA growth in the mid-to-high single digits. CEO Dara Khosrowshah said in a conference call:

We fully expect continued competition around the world, but we've demonstrated an ability to adjust and execute in an attractive, dynamic and highly competitive space. Our core online travel agency business is transitioning from a deep investment phase into one where we can grow in scale, while at the same time, we continue to invest in earlier-stage businesses.

Unfortunately for Expedia shareholders, however, all that investing and intense competition should also continue to weigh on margins, making the stock an easy pass for this Fool. 

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