Booking Holdings Inc (BKNG) Shares Drop 6.1% in Pre-Market Trading on Disappointing Q3 Guidance
Booking Holdings Inc (BKNG) saw its shares plummet by 6.1% in pre-market trading on Friday, following the release of its third quarter guidance which fell short of market expectations. The company's projections for bookings, revenue, and other key metrics were below what analysts had anticipated.
For the third quarter, Booking Holdings expects bookings to grow by 2-4% year-over-year, a significant decrease compared to the Street's estimate of 7%. Revenue is also projected to increase by 2-4% year-over-year, falling short of the Street's expectation of 6.6%. Adjusted EBITDA is forecasted to be between $3.25 billion and $3.35 billion, lower than the Street's anticipated $3.57 billion. Room nights are expected to rise by 3-5% year-over-year, missing the Street's estimate of 7%.
Management attributed these lower projections to various factors, including a decline in flight prices, a tightening booking window compared to Q3 2023, and some softness in the European market. Despite these challenges, analysts at Evercore ISI maintain an Outperform rating on Booking Holdings, citing the company's high-quality growth potential and strong track record.
However, Evercore ISI has lowered its price target for Booking Holdings to $4,200 from $4,500. Despite the cautious outlook and potential softening in demand from other travel players, Jefferies holds a "Buy" rating on the company, highlighting its history of share gains and solid financial performance.
In the second quarter, Booking Holdings exceeded expectations with adjusted earnings per share of $41.90, beating analyst estimates. Revenue for the quarter also surpassed expectations, coming in at $5.9 billion, marking a 7% increase year-over-year. Room nights booked increased by 7%, while gross travel bookings rose to $41.4 billion.
CEO Glenn Fogel expressed optimism about the company's performance in the second quarter, highlighting strong room nights, revenue, and operating income. The company's Board of Directors declared a quarterly cash dividend of $8.75 per share, demonstrating their commitment to shareholders.
In conclusion, Booking Holdings Inc (BKNG) faces challenges in the upcoming quarter due to lower-than-expected guidance. However, the company's strong financial performance in the second quarter and solid growth prospects make it an attractive investment opportunity for long-term investors. It is important for investors to closely monitor the company's performance and market conditions to make informed decisions about their investment portfolios.
