If You Invested $1000 in Booking Holdings a Decade Ago, This is How Much It'd Be Worth Now
How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in Booking Holdings (BKNG) ten years ago? It may not have been easy to hold on to BKNG for all that time, but if you did, how much would your investment be worth today?
Booking Holdings' Business In-Depth
With that in mind, let's take a look at Booking Holdings' main business drivers.
Norwalk, Connecticut-based Booking Holdings Inc. is one of the largest online travel companies in the world. The company’s travel-related offerings cover hotel rooms, airline tickets, rental cars, vacation packages, cruises, “things to do” at customer destinations and travel insurance.
The company has agreements with hotels, airlines companies, cruise ships, transport companies and vacation providers, which enable it to accept bookings on their behalf. Information on these offerings and customer reviews are available on the company’s owned or operated websites, thus helping customers take informed decisions.
Services in the U.S. are provided through the Booking Holdings.com website. The company employs two marketing strategies in the U.S.—“price-disclosed” and “name your own price” or “opaque”.
International revenues are generated through Booking.com and Agoda. Booking.com is older and therefore, has more patrons. Agoda is an Asian company acquired in 2007. Booking Holdings’s investment in Chinese travel company Ctrip facilitates the use of each other’s inventories in China and the U.S.
International results are comprised of revenues from rentalcars.com and Kayak. While rentalcars.com allows it to take rental car reservations, Kayak enables comparative shopping of Booking Holdings inventories. The acquisition of OpenTable that has allowed it to expand into restaurant reservations space, also contributes to the international revenues.
Booking Holdings distributes its services through merchant (42.1% of 2022 total revenues) and agency channels (52.7% of 2022 revenues). It also generates around 5.2% of 2022 revenues through advertisements on its websites, classified as the Advertising & Other category.
The agency model is more lucrative for the company. It generates revenues from travel-related transactions which include travel reservation commissions, GDS reservation booking fees and certain travel insurance fees.
Merchant model revenues are also derived from travel-related transactions which include ancillary fees, credit card processing rebates, customer processing fees along with the ones included in agency model.
Advertising & Other revenues are generated from KAYAK and Open Table.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Booking Holdings, if you bought shares a decade ago, you're likely feeling really good about your investment today.
A $1000 investment made in March 2013 would be worth $3,759.29, or a 275.93% gain, as of March 22, 2023, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 158.95% and the price of gold went up 15.96% over the same time frame.
Looking ahead, analysts are expecting more upside for BKNG.
Booking Holdings reported fourth quarter results wherein both earnings and revenues grew year over year. Substantial improvement in its booking trends owing to growing travel demand was a tailwind. Further, the company experienced growth in rental car, airline ticket units and booked room nights, which was another positive. Strong growth across the agency, merchant, and advertising and other businesses contributed well. We expect growth across these businesses to continue in the days ahead. Our estimates suggest agency, merchant, and advertising and other revenues to see a year-over-year rise of 2.3%, 18.7% and 8.2%, respectively in 2023. Yet, headwinds related to the coronavirus pandemic and macroeconomic uncertainties continue to remain overhangs. Further, intensifying competition in the online travel booking space remains a concern.
Shares have gained 6.01% over the past four weeks and there have been 9 higher earnings estimate revisions for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
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