Google Blamed For Expedia’s Post Earnings Fall

Expedia’s, $EXPE, quarter outperformed Wall Street’s expectations. Yet the stock still sank like a budget inn’s ratings after a few bad reviews. And investors on were left scouring the conference call transcripts for any dirty laundry capable of dragging down shares.

$EXPE ???? Down why???? it was a great earning. Bizarro world here

— Megaas2000 (@Megaas2000) May. 1 at 05:07 PM

A few theories emerged as to why shares of the travel site fell more than 2.5% in extended trading—despite EPS and revenues that beat consensus estimates. Expedia booked $0.16 EPS on more than $1.2 billion in sales. Analysts had expected a penny less EPS on $20 million less in sales.

Some investors speculated that guidance disappointed unspoken expectations. Expedia reiterated prior guidance predicting full year earnings growth between 13% and 16%. Some investors believed that Expedia should have raised its guidance, given the first quarter earnings beat and the impact of its agreement with Travelocity. The fact that it didn’t worried some investors.

Others attributed the share decline to concerns over competition with Google, $GOOG. This month, Google inked a licensing agreement with Room 77 for its hotel search platform. The deal is expected to add umph to Google’s existing travel search offerings.

Though Google announced the deal weeks ago, analysts peppered Expedia management during the conference call with questions about how Google’s site could impact business. Management played down the effects of competing with Google saying that, as long as Google doesn’t play up its own site relative to third-party offerings on travel search results, business would be fine. Expedia is a Google partner in travel search.

Still, all the questions put competition with Google back into the forefront of some investors’ minds, perhaps overshadowing the earnings beat.

$EXPE Down because GOOGLE started their own travel site. GOOG is taking away amrket shares from EXPE. Not good for EXPE and PCLN

— sin kim (@saalanghae) May. 1 at 09:14 PM

Still others argued that the reason for the share drop was that the financial community had priced in a blowout quarter before the report. The stock climbed more than 4% Thursday. When Expedia only beat EPS by a penny, some investors sold, they reasoned.

$EXPE – A Pretty Boring 1Q14 with a slight revenue and EPS beat. Stock should give back some of today's gain. $PCLN

— WebInsights (@WebInsights) May. 1 at 06:03 PM

@BlindTrader This time it was popped before earnings

— Hari Kishan Charora (@charora) May. 1 at 05:50 PM

$EXPE Not a big enough beat, (w) option buyers just watched $$ vanish into nothing with those ridiculous IV #'s.

— Patience & Discipline (@optionstraderoom) May. 1 at 04:15 PM

To be sure. some investors maintain that the post-earnings share decline lacks sense. A company that beats Wall Street expectations should be rewarded—not punished. They looked for the stock to gain today.

$expe beat is considerable given the easter holiday was not in the quarter

— Neeraj Ahuja (@nfusion7) May. 1 at 04:08 PM

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