Expedia (EXPE) Falls 12% on Weak Q4 Guidance

Expedia stock fell about 12% after a soft fourth-quarter outlook overshadowed a Q3 beat, as gross bookings growth is guided to slow to 3.3%-5.2% from 11%.

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Why Did Expedia Stock Fall Despite a Strong Third Quarter?

Expedia stock fell because investors focused on the Q4 profit outlook rather than the Q3 beat. Third-quarter revenue of $4.94 billion topped the $4.73 billion consensus, and adjusted earnings per share of $9.39 beat the $8.89 estimate.

Gross bookings rose 11% to $34.0 billion. Adjusted EBITDA climbed 17% to $1.69 billion, a margin of 34.2%, up 135 basis points. Net income reached $1.03 billion, and diluted earnings per share rose 15% to $8.42.

The B2B segment drove the quarter. B2B gross bookings grew 19% to $11.15 billion and revenue rose 23% to $1.71 billion. B2C gross bookings rose 7% to $22.86 billion, with revenue up 6% to $3.07 billion.

What Did Expedia Guide for the Fourth Quarter?

Expedia guided Q4 gross bookings to $27.9-$28.4 billion, growth of 3.3% to 5.2%. Revenue is projected at $3.69-$3.75 billion, up 4.0% to 5.7%. That midpoint sits roughly in line with the $3.74 billion analyst average.

The shortfall is in profit. Adjusted EBITDA is guided to $830-$880 million, a midpoint of $855 million against consensus of about $917 million. That implies a margin of 22.5% to 23.5%.

Management attributed the softer outlook to geopolitical disruption, unrest in Europe and the Middle East, and the U.S. election cycle. The CFO also said recent acquisitions, higher strategic investment and shifting B2B partner dynamics would pressure margins. The company added that the economics of new AI-powered distribution channels are still being worked out.

Did Expedia Raise Its Full-Year Guidance?

Expedia raised its full-year 2026 guidance. It now expects gross bookings of $131.4-$131.9 billion, up about 10%, and revenue of $16.37-$16.43 billion, up 11% to 12%. Adjusted EBITDA margin expansion is targeted at 1.8 to 2.0 percentage points.

The raise reflects the strength of the first three quarters. It does not offset the signal in the Q4 range, which puts the year's final quarter well below the pace investors had extrapolated from Q3.

Capital Returns

Expedia repurchased about 2 million shares for $576 million in the third quarter. It maintained its quarterly dividend at $0.48 per share. Buybacks continue to shrink the share count, but the market reaction shows capital returns carry less weight when forward margins are under pressure.

Sector Context

Expedia is not alone in citing a weaker demand backdrop. Booking Holdings (BKNG) and Hilton (HLT) have also pointed to the conflict involving Iran as a drag on travel demand. Several brokerages trimmed their price targets on Expedia after the report, in a move that extended the selloff through the session.

The sector issue is cost as much as demand. Online travel companies are spending more to secure traffic as AI-driven search and assistant tools change how consumers find and book trips. Expedia's comments on unresolved AI channel economics place it within that debate. The B2B business is growing faster than B2C, but it carries different margin dynamics, and partner mix shifts can weigh on profitability even when bookings are strong.

Outlook

Expedia enters the final quarter with a deceleration in bookings growth, margin pressure from acquisitions and investment, and an external environment of geopolitical and election-related uncertainty. Full-year guidance sits at the upper end of prior expectations, so the Q4 print will test whether the slowdown is as sharp as guided. The key variables are B2B partner mix, the cost of AI-driven channels and how long travel demand stays soft in Europe and the Middle East.