QS Research · Michael Burry's Scion Capital analyst template · 2006
Expedia Group, Inc. (EXPE)
As of 2026-11-08 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -43% · downside -57% · upside 0%
On Section 13's mid-cycle base (FY2022-FY2025 average EBITDA $2.156B, S2), today's own 8.7x EV/EBITDA (N25) gives EV $18.76B; less $642M net debt (N21) and divided by 122.28M shares (N5) is $148, 43% below $259.24 (N1). TTM EBITDA of $3.70B (N11) at the same 8.7x is about $258, so the stock is capitalizing peak TTM margins, not mid-cycle earnings; the P/E cross-check on normalized net income of $917M at 15.0x (N28) is $113. Q3 2026 was strong (S31), but Q4 2026 guidance decelerates to +4.0-5.7% revenue and +3.3-5.2% bookings (S102), B2B margin pressure has appeared (S31), and Q3 operating cash flow was negative $(1.157)B (S31). The call is short: the price needs roughly $3.72B of sustainable EBITDA at 8.7x, 72% above normalized and essentially TTM peak, while the evidence still points to a cyclical, not secular, earnings base.
Key numbers
- Share price: $259.24
- Market cap: $31.70B
- Latest financial period: TTM to Sep 30, 2026
- Revenue (TTM): $16.23B
- EV / EBITDA (TTM): 8.7x
- P/E (TTM): 15.0x
- Price / book: 19.19x
The 15 boxes
- ✓ 1. Long-form business notes
Expedia makes money as a multi-brand online travel marketplace and B2B distributor; the FY2020 annual report shows over 2.9 million lodging properties and a Retail/B2B segment structure. FY2020 was the cycle trough: revenue $5.20B, operating loss $2.72B, net loss $2.61B and operating cash flow -$3.83B; FY2025 was revenue $14.73B, operating income $1.87B, net income $1.29B and operating cash flow $3.88B. The latest filing text provided is risk-factor heavy—AI/cyber, short-term rental regulation and leverage—and the sources do not provide TTM, quarterly, or segment-level unit economics.
- ✓ 2. Competitive advantage
The filings claim scale and supply breadth but do not show pricing power: FY2025 revenue was $14.73B with operating income of $1.87B and operating cash flow of $3.88B, versus an operating loss of $2.72B and negative operating cash flow of $3.83B in FY2020 — a full-cycle recovery, not a defensive franchise. The company calls itself "one of only a few companies that are focused on building a truly global, travel marketplace," but it also describes competition as "strong and increasing" and concedes supplier-direct channels offer better pricing and their own loyalty programs. Its own stated advantages are breadth of supply, multiple demand channels, a unified loyalty program (One Key) and a merchant model that collects cash at booking (70% of FY2025 revenue). Capital intensity is low (capex $770M FY2025) but the equity base is thin ($1.28B at 2025-12-31) after $1.93B of FY2025 buybacks, so returns rest on buybacks and float rather than on a protected margin.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 2026-09-30; 10-Q dated 2026-11-05, release dated 2026-11-04) came in above the high end of guidance: revenue $4,938M, +12% y/y, gross bookings $34,008M, +11%, adjusted EBITDA $1,689M, +17%, at a 34.2% margin (+135 bps), and GAAP operating income $1,326M, +28%. GAAP net income attributable to Expedia was $1,030M (+7%) and diluted EPS $8.42 (+15%); a higher tax provision and a Q3 2025 other-income gain, not a Q3 2026 one, sit between operating income and net income. Q3 cash flow was seasonally negative and worse y/y (operating $(1,157)M, free cash flow $(1,399)M), against $5,040M of cash and $12,579M of deferred merchant bookings at Sep 30 2026. Full-year 2026 guidance was raised on gross bookings, revenue and adjusted EBITDA margin expansion.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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