Expedia (EXPE) shares closed meaningfully lower on Sept. 16 after a senior Morgan Stanley analyst, Brian Nowak, downgraded the travel technology company to “Underweight.” In his research note, Nowak assigned a $235 price target to EXPE, indicating it could sink another 20% from current levels.
His bearish call is significant given Expedia stock has already been in a downtrend, with its price currently trailing the recent high by about 15%.
More Top Stocks Daily: Go behind Wall Street’s hottest headlines with Barchart’s Active Investor newsletter.
www.barchart.comWhy Morgan Stanley Downgraded Expedia Stock
Nowak’s bearish view is premised mostly on EXPE’s user retention and engagement trends relative to industry peers. In Q2, the firm’s monthly active user growth came in about flat year-over-year.
By contrast, key competitor Booking Holdings (BKNG) expanded its monthly active user base by some 6%, while alternative-accommodation leader Airbnb (ABNB) surged 10% over the same period.
This divergence signals that Expedia is increasingly losing consumer mindshare in an environment where direct user traffic and repeat platform visits are essential for protecting margins against high digital advertising costs.
And EXPE shares’ small 0.67% dividend yield is not enough to offset these risks, the analyst noted.
What Else Could Hurt EXPE Shares
Beyond user metrics, Morgan Stanley highlighted structural risks within Expedia’s product mix.
The platform remains heavily weighted toward airfare and traditional chain hotels, categories the investment firm views as commodity travel products with lower margins.
In fact, its framework for consumer supply differentiation ranks EXPE at the bottom of the online travel sector.
Additionally, as AI-powered travel tools gain market share by aggregating flight and hotel options, commoditized booking engines face elevated risk of disintermediation compared to platforms with unique alternative lodging inventory or entrenched direct consumer relationships.
That said, Barchart’s “56% BUY” average opinion on Expedia shares suggests technical momentum remains in their favor for the near term.
What’s the Consensus Rating on Expedia?
Investors should also note that other Wall Street firms do not agree with Morgan Stanley’s bearish view of Expedia.
According to Barchart, the consensus rating on EXPE stock remains at “Moderate Buy,” with the mean price target of about $335 indicating potential for a significant rally from current levels.
www.barchart.com On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
More news from Barchart
This Analyst Just Downgraded Expedia Stock. Here's Why. JBHT Stock Plummets as J.B. Hunt Warns Investors About Q3 Earnings OpenAI, Anthropic, and Google DeepMind Want AI to Be Regulated — Here’s Who Could Pay the Price INTC Stock Alert: What to Know as Intel Reportedly Teams Up With SK hynix