We last wrote about Expedia in mid-2020. Countries around the globe had mostly closed their borders, the COVID-19 vaccine was still just a hopeful prospect and the summer travel season was practically ruined. No wonder the stock of Expedia, one of the largest travel booking companies, was down 46% from its 2017 high.
Yet, during those dark times EXPE was actually worth a closer look. We thought the COVID crash had mostly de-risked the stock. The world had already grounded to a halt so it could hardly get much worse than that for Expedia. Not to mention the complete 5-3 Elliott Wave cycle on its weekly chart, published on July 19th, 2020.
Expedia’s weekly chart revealed a clear five-wave impulse, labeled I-II-III-IV-V, followed by a simple A-B-C zigzag correction. According to the theory, once a correction is over the preceding trend resumes. Since Expedia was clearly in an uptrend prior to mid-2017, it made sense to expect more strength going forward.
Despite the dire situation the travel industry found itself in, the chart above suggested this was a buying opportunity. Besides, with near-zero net debt on its balance sheet, the company was strong enough financially to endure a bad year or two. The debt factor is of crucial importance when picking stocks in a distressed sector.
Besides Expedia ‘s Stock Price, Little Has Really Changed
Less than a year later now, despite the great progress made with the vaccine rollout, things are hardly back to normal. Travel is far from the pre-pandemic levels and there is a third wave currently sweeping across Europe. Expedia stock, however, is up 103% in the eight months since we turned bullish on it.
The bulls just kept pushing the price higher and never looked back. Their enthusiasm was so strong that an upside gap occurred when Pfizer announced in November that a COVID-19 vaccine has been developed. Last month, the stock reached a new all-time high and is still rising.
In the summer of 2020 the travel industry was in a very bad macro situation. But the market is a forward-looking creature and investors need a forward-looking tool to be successful. Elliott Wave analysis has proven its ability to put us ahead of the news more often than not.
With probably be the biggest pent-up demand boom in history approaching, the future seems bright for Expedia. Despite the already spectacular gains, we think it is too early to abandon ship.
Similar Elliott Wave setups occur in the Forex, crypto and commodity markets, as well. Our Elliott Wave Video Course can teach you how to uncover them yourself!
