COVID-19 vaccines are being rolled-out and with them, hope that we’ll all get to travel again soon.
And with demand expected to rise in the coming months, traders are watching a few names in the space they say could be big beneficiaries of any revival in travel.
Simpler Trading’s director of options, Danielle Shay, is betting on one name in particular.
“I would actually put my money with Airbnb (NASDAQ: ABNB) because you know I’m an active options trader and I know that the fundamentals don’t make a lot of sense here but I like the chart pattern,” Shay said.
Airbnb shares are up nearly 48% so far this year, and Shay says that since mid-December after the company went public, the stock has hit higher highs and higher lows.
“Right now people are using Airbnb a lot more than hotels and also a lot more than airplanes as well so you do have a little bit of macro backing but I think the technical setup here looks great for an options trade,” Shay added.
Wedbush analyst James Hardiman said in a note last week that a survey by the firm found “pent-up demand for travel” in particular for the kind of alternative accommodations offered by Airbnb and Expedia’s (NASDAQ: EXPE) Vrbo business.
Hardiman boosted his rating on Expedia from Neutral to Outperform, and raised his price target on the stock from $130 to $160.
And Hardiman isn’t the only one bullish on the stock. Piper Sandler’s Craig Johnson sees a positive setup in Expedia’s chart.
“The chart still looks very good,” Johnson, the firm’s chief market technician, said. “You’re still making a nice series of higher highs. You’re back above your 50-[day moving average], you’re back above your 200-day moving average, and it looks like to us that this stock still has more room to run.”
Expedia delivered an earnings miss after the bell on Thursday, reporting a loss of $2.64 per share on revenue of $920 million, while analysts were expecting a loss of $1.97 per share on revenue of $1.12 billion.
“Last year was an incredibly difficult year for the travel industry, and while not as hard hit as many of our partners, Expedia was not spared the broadly negative impacts of COVID-19,” said Expedia Vice Chairman and CEO Peter Kern in an earnings release. “The fourth quarter brought signs of hope in the form of vaccine approvals, but rising cases across the globe and rolling shutdowns of various travel markets made an impact. As a result, Q4 did not show any real sequential progress other than some signs of modest improvement around the holidays that carried into the early part of 2021. While the environment continues to be unpredictable, we remain keenly focused on reshaping and simplifying our business.”
Where Expedia shares go from here, though, may depend on how well its investments in its Vrbo vacation rental brand have paid off. That’s according to Boris Schlossberg, managing director of FX strategy at BK Asset Management.
“The market is really betting on a very, very specific type of travel which is that when we are released from the pandemic, most of us are going to go either to the beach or to the lake,” Schlossberg said. “We’re not going to go to the cultural centers, the cities, the museums, the restaurants, the theaters. … Airbnb excels in urban centers and Vrbo excels much more in vacation spots.”
Johnson has his eye on one other stock in the travel space that he says should see a boost as gamblers return to Las Vegas: MGM Resorts (NYSE: MGM).
“Here’s an example of a reopening trade, people getting out, wanting to experience the world again, heading back to Vegas,” Johnson said, adding that the stock is “just now starting to break out to new highs and it looks like to us that this stock seems very strong heading into the earnings print.”
MGM reported on Wednesday that Q4 revenue fell by more than half year-over-year as sales from its Las Vegas Strip properties were down by two-thirds.
Even still, Bank of America Global Research analyst Shaun C. Kelley upgraded the casino operator, and boosted his price target on the stock from $25 to $35.
“While we continue to struggle with he path ahead to fix MGM’s incredibly complex corporate structure,” Kelley said in a note, “Las Vegas is poised for a strong recovery in [the second half of this year] and 2022.”