The coronavirus pandemic hit no other sector harder than travel. Lockdowns took a heavy toll on airlines, hotels and even rental car services as people postponed vacations and business trips were cancelled. Even asset-light companies like Booking and Expedia saw their stock prices plunging. Expedia, which was down 25% from its all-time high even before the pandemic started, fell another 68% in February and March.
On the other hand, proving that those who buy when things look the bleakest reap the biggest returns, EXPE is up 112% from its March bottom. The COVID-19 situation varies from country to country, but overall, the virus is far from being under control. Does this mean Expedia has more room to go as travel slowly returns? Or is another crash lurking around the corner?
The weekly chart above puts Expedia’s entire history as a public company into Elliott Wave perspective. It reveals that the uptrend from $5.90 in 2008 to $161 in 2017 has the shape of a five-wave impulse, labeled I-II-III-IV-V.
Expedia is Ready to “Go Back to Normal”
According to the theory, a three-wave correction in the opposite direction follows every impulse. In Expedia’s case, the decline to ~$41, which erased 75% of the company’s market cap, can easily be marked A-B-C. Fortunately for the bulls, the COVID-19 selloff in wave C completed the entire 5-3 wave cycle. This means the stock price can now be expected to head north as the larger uptrend resumes.
Whether through a vaccine, herd immunity or simply the virus disappearing, going back to normal will certainly take some time. All we know is that people will travel again and Expedia is strong enough to see it through.
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!
Disclosure: The author holds a long position in BKNG stock since March 2020.