Shares of travel bookings platform Expedia Group (EXPE -0.40%) dropped on Friday after the company reported financial results for the fourth quarter of 2023. In reality, the numbers were pretty good, but a surprise change of CEO cast a shadow over the financial results. As of 11:30 a.m. ET, Expedia stock was down 19%.
Expedia's record year
Expedia generates revenue in several ways, including processing travel bookings, earning commissions, and advertising. In 2023, the company generated record revenue of $12.8 billion, including Q4 revenue of $2.9 billion, which was up 10% year over year.
Much of Expedia's operating expenses were little changed, which was good for profits. However, there were bigger factors at work. The company repurchased $2 billion in shares during the year. And higher interest rates provided higher interest income on its cash. Therefore, its full-year diluted earnings per share (EPS) made a huge 145% jump in 2023 compared to 2022.
A change at the top
Regarding its forward guidance, Expedia is loosely expecting its revenue to grow by around 10% in 2024, and it thinks its profit margins can modestly improve. Given its record year and reasonable valuation, one would think Expedia stock would be up today, not down.
However, CEO Peter Kern is surprisingly stepping down after four years at the position. In his letter to employees, obtained by travel research company Skift, Kern basically said that he feels good with what he's accomplished so far and that Expedia is in a good place for long-term success.
While this change does introduce a degree of uncertainty, I believe that Expedia shareholders should feel somewhat comforted that it's hiring from within with the appointment of Ariane Gorin. She's been at the company since 2013 and will likely keep executing on Kern's CEO playbook -- one that just delivered record financial results.
