Today’s Date: February 16, 2026

Introduction

Expedia Group (NASDAQ: EXPE) finds itself at a critical crossroads in the early months of 2026. Long considered a titan of the Online Travel Agency (OTA) space, the company has recently become a lightning rod for debates surrounding the "AI-driven displacement" of legacy internet platforms. Following its latest earnings report on February 12, 2026, the stock suffered a sharp 6.7% decline, fueled not by a lack of historical performance—the company actually beat analyst estimates—but by a cautious forward-looking guidance and growing market anxiety over the rise of "agentic commerce." As the travel industry grapples with the transition from search-based booking to AI-assisted planning, Expedia is attempting to reinvent itself as an AI-first technology provider, even as investors question whether its moat is deep enough to withstand the next generation of digital gatekeepers.

Historical Background

Expedia’s journey began in 1996 within the walls of Microsoft, where it was founded as a small division focused on bringing travel bookings to the nascent World Wide Web. Under the leadership of Rich Barton, it was spun off as a public company in 1999. The turn of the millennium saw a period of intense consolidation; the company was acquired by Barry Diller’s USA Networks (later IAC/InterActiveCorp) in 2003, before being spun off again as an independent entity in 2005.

Over the following two decades, Expedia Group pursued an aggressive multi-brand strategy, acquiring a portfolio that includes Hotels.com, Orbitz, Travelocity, and the short-term rental platform Vrbo. This expansion made it a global powerhouse but left it with a fragmented "hairball" of backend technologies. The 2020-2024 era, under former CEO Peter Kern, was largely defined by a massive technical migration to unify these brands onto a single tech stack. As of early 2026, the company is finally harvesting the fruits of that labor under new leadership, aiming to transition from a collection of brands into a unified platform.

Business Model

Expedia Group operates a diversified business model categorized into two primary segments: B2C (Business to Consumer) and B2B (Business to Business).

1. B2C Segment: This includes the flagship Expedia brand, Hotels.com, and Vrbo. Revenue is generated through "Merchant" models (where Expedia acts as the merchant of record) and "Agency" models (where it facilitates the booking and takes a commission).
2. B2B Segment: Known as Expedia Partner Solutions (EPS), this is the company’s fastest-growing engine. It provides the "pipes" for thousands of partners—including airlines, offline travel agents, and financial institutions—to offer travel bookings to their own customers.
3. Revenue Streams: Beyond commissions and transaction fees, the company earns significant revenue through advertising via its Media Solutions group, allowing hotels and destinations to promote themselves across the Expedia ecosystem.

Stock Performance Overview

Expedia's stock performance has been a saga of volatility and recovery.

• 1-Year Performance: Over the past twelve months, EXPE has been a laggard compared to the broader S&P 500, weighed down by the recent 20% year-to-date correction in early 2026. The stock currently trades around $212, down from its January peak of over $300.
• 5-Year Performance: Looking back to early 2021, the stock has essentially moved in a massive cycle, recovering from the COVID-19 lows but struggling to sustain new highs as competition from Booking Holdings and Airbnb intensified.
• 10-Year Performance: Long-term shareholders have seen moderate gains, but the stock has consistently traded at a valuation discount relative to its peer, Booking Holdings (NASDAQ: BKNG), which has historically demonstrated superior margin profiles and European market dominance.

Financial Performance

In its FY 2025 report, Expedia showcased operational strength that was overshadowed by conservative 2026 guidance.

• Revenue & Growth: Full-year 2025 revenue grew by 8% to approximately $14 billion. The fourth quarter was particularly robust, with an 11.4% revenue increase to $3.55 billion.
• Profitability: Adjusted EBITDA for Q4 2025 rose by 32% to $848 million, reflecting a significant margin expansion of 400 basis points. This was driven by the efficiencies gained from the unified tech stack.
• Cash Flow & Buybacks: Expedia remains a cash-flow machine. The company has used its strong balance sheet to aggressively buy back shares, a move intended to support the stock price amidst the current market skepticism.
• The "Guidance Gap": The 6% stock drop on Feb 13 was largely attributed to CFO Scott Schenkel’s 2026 margin expansion guidance of only 100-125 basis points, which suggested that the "tech efficiency" gains might be plateauing or being reinvested into expensive AI initiatives.

Leadership and Management

Ariane Gorin took the helm as CEO in May 2024, succeeding Peter Kern. Gorin, who previously led the high-growth B2B division, has brought a more aggressive, growth-oriented culture to the company. Her strategy centers on three pillars:

1. International Expansion: Moving beyond the saturated U.S. market into high-growth regions like Japan, Brazil, and Northern Europe.
2. Marketing Efficiency: Moving away from broad-based performance marketing toward high-engagement social media and loyalty programs.
3. The OneKey Program: A unified loyalty program across Expedia, Hotels.com, and Vrbo designed to increase customer lifetime value and reduce reliance on expensive Google search traffic.

Products, Services, and Innovations

The crown jewel of Expedia’s current innovation pipeline is Romie, an AI travel assistant. Unlike early chatbots, Romie is designed for "agentic commerce." It can participate in group chats on WhatsApp or iMessage, helping friends plan a trip by suggesting hotels and activities and then booking them directly within the chat interface.

On the back end, the Open World Platform is Expedia’s attempt to become the "Amazon Web Services of Travel." By exposing its AI tools—such as fraud detection, dynamic pricing, and sentiment-analyzed reviews—via APIs, Expedia allows third-party businesses to build sophisticated travel experiences on top of its infrastructure.

Competitive Landscape

Expedia faces a two-front war:

• Booking Holdings (BKNG): The European giant remains more profitable and has a higher direct-booking mix. While Expedia leads in the U.S. (roughly 20% market share), Booking’s "Connected Trip" strategy has historically been more effective at capturing international travelers.
• Airbnb (NASDAQ: ABNB): Airbnb continues to dominate the "unique stays" category. While Vrbo is a formidable competitor in whole-home rentals, Airbnb’s brand recognition and recent focus on "Trust Infrastructure" and AI-driven guest verification create a high barrier to entry.
• The Google Threat: Google Travel remains the largest "frenemy." While it provides massive traffic, its evolution into a direct booking-like experience via AI "Overviews" is a primary risk factor for all OTAs.

Industry and Market Trends

The travel sector in 2026 is defined by "Experience-First" spending. Consumers are shifting budgets away from luxury goods and toward unique, high-value experiences. However, the market is also seeing "travel fatigue" in certain segments, with U.S. domestic demand leveling off.

A critical trend is the rise of "Social Commerce." Travelers are increasingly booking based on TikTok or Instagram influence rather than traditional search engines. This is why Expedia is pivoting its marketing spend toward creator partnerships and integrated social booking tools.

Risks and Challenges

The primary concern haunting investors—and the cause of the recent 6% dip—is AI Disruption. The "Software Apocalypse" narrative suggests that if OpenAI, Google, or Apple create a truly omniscient AI agent, the need for a dedicated "travel app" could vanish. If a user can simply say, "Siri, book me a trip to Maui for under $5,000," and the AI handles the logistics, the brand power of Expedia could be bypassed entirely.

Other risks include:

• Marketing Costs: As AI changes search, the cost of acquiring customers (CAC) could spike if Expedia has to compete with AI agents for the "first click."
• Macroeconomic Pressure: Inflationary pressures on middle-class consumers could specifically hurt the Vrbo segment, which relies on larger, more expensive family vacations.

Opportunities and Catalysts

Despite the risks, several catalysts could drive a re-rating of the stock:

• B2B Dominance: Expedia’s B2B segment is growing at triple the rate of its B2C segment. As more banks and retailers offer travel rewards, Expedia’s infrastructure becomes indispensable.
• Tiqets Acquisition: The planned acquisition of the tours and activities platform Tiqets could significantly boost margins by allowing Expedia to capture a larger slice of high-margin "on-trip" spending.
• International Pivot: If Gorin’s push into Japan and Brazil yields double-digit growth, it would prove Expedia isn't just a U.S. domestic story.

Investor Sentiment and Analyst Coverage

Wall Street is currently polarized on EXPE. Following the Feb 2026 earnings call, firms like TD Cowen and Piper Sandler lowered their price targets, citing "tempered margin expectations." However, contrarian value investors point to the company’s extremely low P/E ratio relative to historical norms, arguing that the "AI death" of OTAs is vastly overblown. Institutional ownership remains high, but hedge fund sentiment has cooled recently as many rotation plays moved into "pure-play" AI infrastructure rather than AI-impacted services.

Regulatory, Policy, and Geopolitical Factors

Expedia is navigating a complex global regulatory environment:

• Digital Markets Act (DMA): In Europe, the DMA is forcing "gatekeepers" like Google to change how they display their own travel products, which could theoretically benefit OTAs by creating a more level playing field in search results.
• Short-Term Rental Laws: Cities like New York and Barcelona continue to tighten restrictions on short-term rentals, posing a persistent regulatory headwind for the Vrbo brand.
• Geopolitical Tension: Management recently cited ongoing geopolitical issues impacting Asian travel as a reason for cautious growth projections in 2026.

Conclusion

Expedia Group is a company in the midst of a high-stakes transformation. Its operational fundamentals—revenue growth, massive cash flow, and a unified tech stack—are stronger than they have been in a decade. Yet, the market is pricing in an existential threat. The recent 6% decline is a symptom of "AI anxiety," where investors are penalizing the stock for the possibility of disruption rather than current financial failure.

For investors, the key to EXPE lies in its B2B engine and its ability to turn Romie into a indispensable personal concierge. If Expedia can prove that its data and inventory are a moat that even the most advanced AI agents must pay to access, the current valuation may look like a significant bargain. However, if the "gatekeeper" role shifts entirely to the operating system level (Apple/Google/OpenAI), Expedia will have to work much harder to remain relevant. Watching the adoption rates of the OneKey program and the growth of the B2B segment in the coming quarters will be essential for anyone holding the stock.

This content is intended for informational purposes only and is not financial advice.