What happened

Shares of Booking Holdings (BKNG -0.08%) were pulling back Tuesday in sympathy with rival online travel agency Expedia (EXPE -0.24%), shares of which fell sharply after it reported first-quarter earnings Monday night. The numbers themselves were better than estimates, but the market seemed to want more, especially as the travel market is expected to have a robust recovery this summer.

As of 3:17 p.m. ET, shares of Booking Holdings were down 3.9%, while Expedia stock was off by 13%. 

A woman sticking her head out of a moving train.

Image source: Getty Images.

So what

Expedia's results showed a strong recovery from a year ago: Gross bookings were up 58% to $24.4 billion. But that was still less than it achieved in Q1 2019, when gross bookings were at $29.4 billion. Expedia's revenue, meanwhile, jumped 81% year over year to $2.25 billion, slightly ahead of estimates for $2.23 billion. But that was also below the $2.61 billion it reported in Q1 2019.

On the bottom line, its adjusted loss narrowed to $0.47 per share during a seasonally weak quarter, which also topped estimates at a per-share loss of $0.64. 

"All in, while we are keeping an eye on various macro indicators including inflation and ongoing geopolitical tensions, we continue to see positive indicators for a strong recovery in leisure travel this summer," Expedia CEO Peter Kern said. "We are also pleased to see city, business, and international travel coming back, three components key to the complete return of travel." 

Now what

Expedia didn't offer guidance, but what seemed to sink the stock was the market's realization that the eventual recovery of its business is already priced into the stock. In fact, Expedia is still up 40% since the start of 2020. Shares of Booking Holdings, on the other hand, are essentially flat over the same period. However, when Booking Holdings delivers its Q1 report, it is likely to reveal that it faced greater headwinds than Expedia because most of its business is in Europe, which has been under stricter COVID-19 protocols than the U.S.

Booking Holdings will deliver its first-quarter earnings report after the trading day ends Wednesday. Analysts are expecting revenue to jump by 118% year over year to $2.54 billion, with a profit of $0.90 a share. Like Expedia, though, Booking Holdings' business has not yet returned to pre-pandemic levels, so its eventual recovery also seems priced into the travel stock.