Expedia, Tripadvisor cut to Sell as Wolfe Research takes bearish view on travel stocks
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The online travel sector should be avoided by investors heading into 2023, according to Wolfe Research.

In a note to clients on Wednesday the firm dimmed its view of the overall sector to Underweight from a prior Market Weight due to an expected downturn in demand. As such, Expedia (NASDAQ:EXPE), Tripadvisor (NASDAQ:TRIP) were downgraded from Hold to Sell-equivalent ratings and Booking Holdings (NASDAQ:BKNG) was cut from Buy to Hold. 

âTravel demand is likely to moderate amidst a macroeconomic slowdown in 2023 and consensus does not appear to reflect the magnitude accurately,â the firmâs analysts told clients. âMany online travel companies have ventured into less efficient customer acquisition channels over the last 12 to 18 months and have seen unit economics erode versus 2019.â

The analysts added that valuations in the space are stretched at present, in their view.

For Expedia (EXPE) specifically, the analysts said the platform is âbetween a rock and a hard place from market share losses and margin compressionâ and is likely to continue to lose market share into 2023âs expected downturn. Similarly, the value proposition presented by Tripadvisor (TRIP) appears to be ebbing, prompting the downgrade. 
Shares of Expedia (EXPE) slipped 2.32% in premarket trading while Tripadvisor (TRIP) tumbled 4.26%. 

While Bookingâs (BKNG) Europe exposure raises concerns for the team, it is still considered âbest in classâ and therefore moved only to Neutral. Airbnb (ABNB) was likewise retained at a Neutral rating.
Read more on Morgan Stanleyâs downgrade of Airbnb.