Please ensure Javascript is enabled for purposes of website accessibility

Why Expedia Group's Shares Popped 9.7% Today

By Travis Hoium – Apr 23, 2020 at 1:28PM

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

A huge investment should give Expedia Group room to survive the current crisis.

What happened 

Shares of Expedia Group (EXPE -0.80%) jumped as much as 9.7% today after the company announced a new CEO and $3.2 billion in new financing. Shares settled to a 6.8% gain at 12:30 p.m. EDT. 

As Expedia rose, TripAdvisor (TRIP -1.78%) came along for the ride, given their similar business models. There wasn't specific news about the company, but shares were up as much as 6% and were up 4% as of this writing. 

So what

Vice Chairman Peter Kern was named CEO of Expedia Group, and Eric Hart was named CFO. This comes after a management shakeup that started last December and should give Expedia some management stability through the current crisis. 

Woman with a mask on, walking through an airport.

Image source: Getty Images.

Expedia also announced $3.2 billion in new investment. Funds managed by Apollo Global Management and Silver Lake will provide $1.2 billion in equity investment in the form of perpetual preferred stock. Another $2 billion of new debt financing will also be sold to investors. The cash infusion is intended to get the company through the current travel downturn and help it emerge as a stronger company. 

Now what

No one, including Expedia's management, knows how long the current downturn in travel will last, so companies are just trying to shore up their balance sheets to survive. A $3.2 billion infusion of cash should be enough to both survive as well as invest in new capabilities that will drive long-term growth. That's why investors are pushing the stock higher today.  

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends TripAdvisor. The Motley Fool has a disclosure policy.

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

Expedia, Inc. Stock Quote
Expedia, Inc.
EXPE
$91.26 (-0.80%) $0.74
TripAdvisor, Inc. Stock Quote
TripAdvisor, Inc.
TRIP
$22.06 (-1.78%) $0.40

*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 analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

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

Premium Investing Services

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