The Nasdaq Composite (^IXIC -0.57%) has been a great place to invest in 2020. Even though the index wasn't able to gain any ground on Tuesday, falling about half a percent at midday, the Nasdaq is still head and shoulders above its market benchmark peers so far this year.

Much of the Nasdaq's success has come from stocks that found a way to thrive during the conditions that the COVID-19 pandemic brought. But what's even more amazing is that a big-name Nasdaq stock that has suffered greatly from the pandemic has moved to all-time highs today. That stock is Booking Holdings (BKNG 0.02%), and the online travel giant's recovery says something about the forward-looking optimism that shareholders have even during tough times.

Why Booking is on the move

Booking Holdings stock was higher by about 1.5% at midday on Tuesday. That's not a huge move, but it was enough to send the share price into uncharted territory. It also left the stock up just 6% for the year, which hardly ranks the company among top performers on the Nasdaq.

Hotel room with two queen beds and two windows.

Image source: Getty Images.

However, the amazing thing about Booking Holdings is that it has managed to recover at all. The online travel business has gotten hammered as international travel restrictions limit its ability to find demand for hotel bookings and other travel services.

In the first nine months of 2020, Booking's revenue was down 53% from the same period in 2019. Profits were down 94%, and the only thing keeping the company out of the red was a significant capital gain on the sale of marketable securities. Gross bookings in the third quarter alone were down by nearly half year over year.

Yet investors have gravitated to the positives in Booking's performance. Although room-nights booked were down 43% year over year in the third quarter, they bounced back substantially from the shutdown conditions in the second quarter. Similar rebounds in rental car days and airline tickets gave investors hope for better times ahead. Moreover, even though third-quarter adjusted earnings per share were down more than 70% from year-earlier levels, Booking was still able to turn a profit during a key time of year.

What's ahead for Booking Holdings?

The bull case for Booking has two main components. First, investors anticipate that at some point in the future, travel conditions will return to their past levels. When that happens, Booking should be able to produce the much-larger profits that it had been on track to produce before the pandemic.

Indeed, at least for a period of time, Booking should enjoy better-than-normal results. Pent-up travel demand should drive massive volume in hotel bookings and other travel services until people feel like they've gotten back to normal.

Also, the IPO of Airbnb (ABNB 0.01%) has also provided a helpful valuation comparison for Booking shareholders. Coming public with a big first-day pop, Airbnb's market capitalization is greater than that of Booking Holdings, even though Booking has a much longer history and many of the same growth opportunities ahead of it. Excitement about the Airbnb offering has stoked interest in Booking Holdings as well.

It's odd to see Booking Holdings at all-time highs when so many travel stocks in the hotel, airline, cruise ship, and rental car industry remain at deep discounts to where they started 2020. To justify these prices, Booking will have to execute well and grab every chance to profit when people return to the road after COVID-19 is under control.