The travel industry has been in doldrums owing the coronavirus pandemic and the associated travel bans. One of the companies that have been particularly affected by the state of affairs is Booking Holdings Inc (NASDAQ:BKNG). The company’s business has suffered substantially since all sorts of travel has pretty much stopped and the Booking stock has tanked by as much as 27% in 2020 so far.
Why BKNG Stock Outperformed?
As a matter of fact, the stock has underperformed when compared to the wider market. In such a situation, it may be worthwhile to figure out if the current levels of the stock present a buying opportunity or not.
Booking created a competitive edge over its rivals by becoming one of the biggest players when it came to international hotel bookings. This particular move from the company prove to be the basis of the company’s growth as it moved into the market first and managed retain the advantage. In Q4 2019, investors must have got a bit spooked when the company’s growth seemed to have stalled. Gains generated from gross travel bookings were only 6% while revenues and earnings both rose by 4% from the previous year. That was even before the coronavirus pandemic hit the travel industry.
The current situation has forced many to take a closer look at Booking’s business. The company has stated this month that it has enough cash to see it through to 2021 but if the situation deteriorates further, then it could put huge pressure on the Booking stock. In order to raise more cash, Booking sold a bit of the company to Trip.Com and also raised $4 billion through notes, which are going to mature in 5 to 10 years.
That has given the company some breathing space until the situation improves. Close watchers of the stock believe that the stock could rebound to 2019 levels. Moreover, if people start travelling extensively following the lifting of travel restrictions, the Booking Holdings stock could generate significant gains.