Story Stocks^®

Booking Holdings (BKNG) is trading modestly lower despite the online travel reservation giant reporting big upside with its Q3 results last night. Both EPS and revenue came in well ahead of analyst expectations. However, the EPS upside was not as impressive as in recent quarters, and Q4 revenue growth guidance of +10-12% yr/yr landed roughly in-line with expectations. Since Q3 is BKNG's seasonally strongest quarter, the slightly more subdued upside may be disappointing investors.

• Room nights grew 8% yr/yr to 323 mln, consistent with Q2's +8% and Q1's +7% growth. This was solid given the tough comp from last year and exceeded the high end of guidance by nearly 3 percentage points.
• The upside was driven by an expansion of the booking window (period between making the reservation and check-in), which pulled some demand forward into Q3.
• Room night growth was broad-based across all major regions: Europe and the US up high single digits, and Asia and Rest of World up low double digits.
• Certain travel corridors, such as Canada--Mexico and Europe--Asia, saw robust growth, offsetting softer inbound US demand.
• In the US, average daily rates (ADRs) were slightly lower and length of stay was shorter yr/yr, suggesting some ongoing consumer caution in discretionary travel spending.
• For Q4, BKNG expects room night growth of +4-6%, reflecting a moderation from Q3 as the booking window returns to more typical patterns.
• Management noted that global leisure travel demand remains stable, though macro and geopolitical uncertainty persist.

Briefing.com Analyst Insight:

While BKNG delivered another fundamentally strong quarter, the bar was simply set too high. After several periods of significant beats, Q3's more modest beat and moderation in room night growth left investors wanting more. The softening ADRs and cautious tone around inbound US travel may also be weighing on sentiment. Still, BKNG's strong geographic diversification and resilient travel trends should underpin steady performance into 2025. At roughly 18x forward earnings, valuation remains reasonable, but upside may be capped in the near term until growth reaccelerates or guidance improves.