Pros and Cons of Investing in Booking Holdings

PHOTO CREDIT: Booking Holdings

OVERVIEW

Booking Holdings Incorporation is a company based in the United States. The company offers travel booking services to customers around the world. The company operates under Kayak, Booking.com, Rentalcars.com, and Open Table. The company offers booking services for restaurants, hotels, flights, cruises, rental cars, and other products. The company was founded in 1997.

PROS

  1. Booking Holdings is a great reopening play in an investor’s portfolio. The company saw a drop in demand for its services during the pandemic as people stayed indoors and stopped traveling. However, once this pandemic is over, the company will see a rise in demand for their products and services once again as people travel again.
  2. Booking Holdings is seeing a pent-up travel demand in the leisure sector. The company is seeing demand for leisure destinations surge as people go out for the first time in over a year. In fact, there are shortages of many travel products and services in some destinations. This will benefit the company’s recovery and will also benefit investors in the company.
  3. Domestic and international destinations have opened up earlier than expected for travelers. This will further help the company recover as they will see bookings to domestic destinations like Florida and California as well as international destinations like Europe and the Caribbean increase. This will benefit the company and its investors.

CONS

  1. The company faces tough competition in the travel booking industry. Some of the competitors include Airbnb, Vrbo, Expedia, Costco, and many others. This competition might hurt the company and its investors in the future.
  2. The company faced negative impacts from the pandemic. The company saw a drop in demand for their services as people stayed indoors and as governments closed their borders and locked them down. This hurt the company’s financial results for the FY 2020 and has also hurt investors in the company.
  3. One aspect that is slowly recovering is business travel. Many companies that use Booking Holdings are not using the company’s services due to work from home and pandemic conditions around the world. This slow return in business travel will hurt the company and its investors.
  4. The company has an extremely expensive stock. At the moment, the company’s stock trades at over $2200 (which is 133 times earnings). This is an extremely expensive stock to own (especially because it is a travel booking company). I would wait for the stock price to fall a bit more and then look to invest in this otherwise great company.

MY OPINION

I think that Booking Holdings is a decent long-term investment due to its position as a good reopening play, the pent-up travel demand, as well as the return of domestic and international destinations. However, tough competition, negative impacts from the pandemic, an expensive stock price, as well as a slow return of business travel might hurt the company and its investors in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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