Please ensure Javascript is enabled for purposes of website accessibility
Free Article Join Over 1 Million Premium Members And Get More In-Depth Stock Guidance and Research

Why Booking Holdings Stock Just Dropped 8%

By Rich Smith - Nov 7, 2019 at 12:47PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings come out tonight, and investors are nervous.

What happened

Booking Holdings ( BKNG -2.65% ) gave investors a bit of a shock this morning, finally announcing its Q3 earnings release date, and it's going to!  

Or, more precisely, tonight, after close of trading.

Now, you might think investors would be pleased at the news that they'll soon get to hear how well Booking Holdings is doing -- but they're not. Instead investors are spooked, and they've sold off Booking Holdings stock to the tune of 7.6% as of 12:20 p.m. EST.

Cartoon characters confused by a falling stock chart

Image source: Getty Images.

So what

What's to explain this curious reaction to Booking's mere announcement that it's going to announce something else in a few hours?

The reason may be traced to the earnings that rival online travel agent Expedia ( EXPE -3.53% ) announced yesterday, which featured a 22% drop in net income. Expedia stock is falling in reaction to that news (and to the two analyst downgrades that followed it).  

Investors appear to be assuming that if the travel market is bad for Expedia right now, then it's probably going to turn out to have been bad for Booking as well when it reports its own earnings tonight.

Now what

Speaking of which, heading into this earnings report, analysts are forecasting that Booking will grow its Q3 sales 6% to $5.1 billion and report an even bigger 18% jump in profits -- $44.57 per share. With such a high hurdle to clear, there's a bigger chance that Booking will trip up and fail to grow as much as expected.

At least some investors don't seem interested in sticking around to see if that happens. Instead they're selling now before things have a chance to get any worse.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Booking Holdings Stock Quote
Booking Holdings
$2,114.44 (-2.65%) $-57.49
Expedia, Inc. Stock Quote
Expedia, Inc.
$155.58 (-3.53%) $-5.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 12/04/2021.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Our Most Popular Articles

Premium Investing Services

Invest better with the Motley Fool. Get stock recommendations, portfolio guidance, and more from the Motley Fool's premium services.