The coronavirus pandemic has hit the entire global economy hard, but the travel industry has seen some of the biggest impacts. With air travel at a near-standstill, most people are staying home, and hotels just aren't getting booked. That's bad news for online travel specialist Booking Holdings (NASDAQ:BKNG), especially given its emphasis on international destinations. The company's stock is down more than 30% year to date, badly underperforming the broader stock market.

This isn't the first time that Booking Holdings has had to recover from an existential crisis. During the dot-com bust, the company then known as Priceline.com found itself having to struggle to survive. But survive it did, and in the years that followed, Booking Holdings became one of the most successful stocks of the 21st century. Now, Booking Holdings once again will have to prove how resilient it can be in the face of adversity.

BKNG Chart

BKNG data by YCharts.

How Booking Holdings got where it is today

Booking Holdings is a rare example of a company that came close to failing before becoming a huge success story. The travel specialist's innovative approach to helping customers book hotel rooms and airplane tickets made it a big winner during the dot-com boom, but by 2003, the company's stock was hugging the bottom of the charts. Booking resorted to a reverse split to boost its share price, and it became one of the few companies to beat the odds and not only stay in business but thrive following that move.

After that near-death experience, Booking knew that it needed to sustain a competitive advantage. It decided to focus more on international hotel bookings than its rivals, with Priceline's purchase of Booking.com creating the basis for the company's current name. The strategic decision gave Booking Holdings a first-mover advantage overseas that it retains to this day.

Booking Holdings logo of a stylized B in different colored dots.

Image source: Booking Holdings.

A huge shock for Booking Holdings

Coming into 2020, some investors were already worried about Booking Holdings' slowing growth. In the fourth quarter of 2019, gains in gross travel bookings came in at just 6%, with earnings and revenue both climbing 4% year over year.

That was before the coronavirus outbreak happened, and now, fears about Booking Holdings and the entire online travel industry are larger than ever. Border closures have made international travel nearly impossible, and travel bans are forcing airlines to reduce their operations dramatically. That leaves the online travel service without customers to serve. Moreover, if the economic impacts of the pandemic are as bad as many fear, then even once travel opens up again, fewer people will be able to afford it. That points to even further slowdowns for Booking Holdings growth in the future.

The about-face in travel activity has forced investors to look critically at Booking Holdings' liquidity. The company said in early April that it has enough cash to make it through the end of 2021, although if conditions weaken further, that date could come sooner. To generate more cash, Booking sold off some of its stake in China's Trip.com (NASDAQ:TCOM). It also turned to the credit market to sell $4 billion in notes with maturities five to 10 years into the future. That should give Booking some time for industry conditions to improve.

A big hit

Investors currently believe that Booking Holdings could see its earnings get cut in half in 2020 compared to 2019 levels. That would put even the company's reduced stock price at about 26 times earnings, which looks like a rich valuation for a company facing future growth challenges.

However, those following the stock believe that Booking will bounce back quickly, recovering to near 2019 earnings levels by 2021. That's far from certain, but if the pandemic ends up leaving consumers with pent-up travel demand that they can afford to satisfy following the end of travel bans, then today's share-price levels for Booking will look cheap in hindsight. Those willing to take that risk could find Booking Holdings to be a good buy right now, but it's not the best pick for more conservative investors who prefer clearer growth stories.