Why is Expedia stock sliding today?

Shares of Expedia Group (EXPE) declined 3.0% in afternoon trading on August 7, 2023, after news broke that artificial intelligence company OpenAI had acquired Odessia, a travel planning platform utilizing AI technology. The acquisition, reported by The Information, did not disclose financial terms, but Odessia's website confirmed the news. Investors grew concerned that AI could potentially bypass online travel agencies entirely, connecting consumers directly with suppliers.

The selloff was further exacerbated by a wave of analyst price target reductions affecting Expedia. Jefferies lowered its price objective from $350 to $325 while maintaining a Buy rating. Other analysts had already begun recalibrating their expectations following Expedia's earnings report on November 4, where the company reported softer-than-expected Q4 EBITDA guidance amid a strong Q3 revenue growth of approximately 12% year-over-year.

The OpenAI-Odessia news impacted the entire online travel sector, leading to declines in Booking Holdings and Airbnb shares on August 7. The broader market also contributed to the pressure, with the Nasdaq falling over 1.0%, the S&P 500 dropping 0.6%, and the Dow Jones declining 0.4%, signaling a risk-averse sentiment across equities that intensified the negative impact on travel stocks.

Taken together, the convergence of a high-profile AI competitive threat, multiple analyst target adjustments, and a challenging market environment created a difficult scenario for Expedia shares. The stock's intraday low for the day reached $245.31, well below its opening price of $259.16, highlighting the sensitivity of online travel valuations to any signal indicating that AI platforms could diminish their role as intermediaries connecting consumers with suppliers.