Can Travel Recover at Booking Holdings (BKNG)?

The Booking Holdings Inc. (NASDAQ: BKNG) share price shows Mr. Market thinks travel can recover from the coronavirus.

For example, Mr. Market paid $2,366.79 for Booking Holdings (BKNG) shares on 9 March 2021. Interestingly, Mr. Market’s faith in Booking Holdings grew during the COVID-10 Pandemic. Mr. Market paid $1,527.80 for Booking shares on 9 March 2020.

I think coronavirus could kill Booking Holdings because it owns several major online travel brands. The Booking Holdings brands include Priceline, Booking.com, Agoda.com, Kayak,, and Opentable.

Mr. Market, however, disagrees. The share price shows Mr. Market believes in Booking even as Coronavirus kills its business.

Will Coronavirus Kill Booking Holdings?

Booking (BKNG) admits its business is collapsing. Booking Holdings’ gross travel bookings fell from $96.4 billion in 2019 to $35.4 billion in 2020.

The principal business at Booking is travel bookings. The Booking Holdings Fact Sheet shows the amount of travel bookings fell by nearly two-thirds in 2020. In fact, Bookings’ gross travel bookings could double in 2021, and still be one-third lower than in 2019. In fact, the Booking Holdings admits travel bookings fell by 63% between 2019 and 2020.

Notably, the number of room nights Booking Holdings booked fell from 844 million in 2019 to 355 million in 2020. Thus a key segment of Booking Holdings’ business is less than half what it was in 2019. The Booking Holdings Fact Sheet admits the number of room nights booked fell by 58% between 2019 and 2020.

So yes, COVID-19 could have fatally wounded Booking Holdings. The danger for Booking is that the booking numbers will stay at their 2020 levels for a few years.

Even Disney is Closed

I think such low numbers are probable because of fear of coronavirus and quarantines, even with vaccines. Notably, many popular travel destinations are closed.

Nobody knows when Disneyland will reopen, for example. Although CNET speculates the Magic Kingdom could reopen by 1 April 2021 (ironically April Fool’s Day), if authorities concede.

However, the Disneyland Resort is attracting many visitors. Authorities in Orange County, California, are using Disneyland’s gigantic parking lots as vaccination sites. That’s good news for the people of Orange County and bad news for Booking Holdings.

How Much Money is Booking Holdings Losing?

Predictably, Booking Holdings (BKNG) lost enormous amounts of money and revenue in 2020.

For example, Booking Holdings’ quarterly revenues fell from $3.339 billion on 31 December 2019 to $1.238 billion on 31 December 2020. Thus, revenues fell by two-thirds.

Booking Holdings’ quarterly gross profits also fell by two-thirds. Booking Holdings reported $3.339 billion in quarterly gross profits on 31 December 2019. The quarterly gross profits fell to $1.238 billion on 31 December 2020.

Similarly, Booking Holdings quarterly operating income fell from $1.172 billion on 31 December 2019 to -$153 million on 31 December 2020.

Stockrow estimates that Booking Holdings’ revenue shrank by 62.92% in the quarter ending on 31 December 2020. I think Booking Holdings’ business is shrinking before our eyes. Yet, Mr. Market paid $2,307.10 for its stock on 5 March 2021.

How Much Cash is Booking Holdings Burning?

Predictably, Booking Holdings (BKNG) lost enormous amounts of money and revenue in 2020.

For example, Booking Holdings’ quarterly revenues fell from $3.339 billion on 31 December 2019 to $1.238 billion on 31 December 2020. Thus, revenues fell by two-thirds.

Booking Holdings’ quarterly gross profits also fell by two-thirds. Booking Holdings reported $3.339 billion in quarterly gross profits on 31 December 2019. The quarterly gross profits fell to $1.238 billion on 31 December 2020.

Similarly, Booking Holdings quarterly operating income fell from $1.172 billion on 31 December 2019 to -$153 million on 31 December 2020.

Stockrow estimates that Booking Holdings’ revenue shrank by 62.92% in the quarter ending on 31 December 2020. I think Booking Holdings’ business is shrinking before our eyes. Yet, Mr. Market paid $2,307.10 for its stock on 5 March 2021.

What Value does Booking Holdings Have?

Booking Holdings (BKG) offers some value. The company reported $11.063 billion in cash and short-term investments on 31 December 2020.

The cash and short-term investments grew from $7.310 billion on 31 December 2019. Similarly, Booking reported $21.874 billion in total assets on 31 December 2020. The total assets grew from $21.402 billion on 31 December 2019.

However, Booking Holdings’ total long-term debt grew from $8.661 billion on 31 December 2019 to $11.952 billion on 31 December 2020. Hence, the only things growing at Booking appear to be the cash in the bank and the debt.

I cannot see anything in Booking Holdings’ financial data that justifies the $2,307.10, Mr. Market paid for the stock on 5 March 2021. I believe the only thing driving this stock’s growth is hope that COVID-19 will disappear and travel will rebound overnight.

No Travel will Not Rebound

I see no evidence that will occur even with vaccines available. My prediction is that travel will not recover until 2024 at the earliest.

 Travel could rebound fast if coronavirus subsides. However, I think all it will take is one surge in COVID-19 or rumors of a vaccine-resistant coronavirus to shut travel again.

Data shows coronavirus is not going away. Worlometers estimates France reported 21,825 new cases of coronavirus on 7 March 2021. Similarly, the United States reported 32,574 fresh cases of COVID-19 on the same day. Plus, Italy reported 20,76 new cashes of coronavirus on 7 March 2021.

Those numbers show coronavirus is not slowing and could get worse. Notably, the number of new coronavirus cases is high in three popular travel destinations, the United States, France, and Italy. I cannot see how travel will return with COVID-19 still increasing.

I think Booking Holdings (NASDAQ: BNKG) is a terrible stock everybody needs to avoid. The company’s business is in collapse and its stock pays no dividend.

My suspicion is that Booking Holdings will collapse completely if coronavirus does not abate. Investors need to stay far away from Booking Holdings.  

 Originally published at https://marketmadhouse.com on March 9, 2021.