Why Booking Holdings Stock Is Down By 5% Today

Key Insights

• Sky-high oil prices put pressure on travel stocks. 
• Booking Holdings suspends operations in Russia amid exodus of foreign companies out of the country. 
• The stock will remain extremely sensitive to energy market dynamics in the upcoming trading sessions.

Booking Holdings Stock Drops As Oil Prices Rally To New Highs

Shares of Booking Holdings gained strong downside momentum and continued to move lower after the company decided to suspend operations in Russia amid harsh sanctions on the country.

Booking had a dominant position in the Russian market. After the company’s decision, its market share will be taken by rivals like Ostrovok. However, it should be noted that Russia and Ukraine represented “a very low single-digit percentage of our total gross bookings”, according to Booking Holdings.

The main problem for the company is the rapid increase of the energy prices due to potential sanctions on the Russian energy sector. Today, WTI oil made an attempt to settle above the $127 level but pulled back below $120, a level not seen since 2008.

High oil prices could have a significant impact on the travel industry, so it’s not surprising to see that travel-related stocks have been under serious pressure in recent trading sessions.

What’s Next For Booking Holdings Stock?

Analysts expect that Booking Holdings will report earnings of $90.51 per share in 2022 and $123.25 per share in 2023, so the stock is trading at 15 forward P/E for the next year. However, earnings estimates have been moving lower in recent weeks, and high energy prices will push these estimates even lower.

The main risk for Booking Holdings and similar companies is the high price of oil, which will make transportation expensive and boost inflation. At this point, the price of oil depends on the geopolitical developments, so Booking Holdings stock will be extremely sensitive to any news on additional sanctions on Russia, which may hurt the country’s energy sector.

Booking Holdings stock is down by roughly 30% from the highs that were reached less than a month ago, so it may attract some speculative traders who are willing to beat that the recent pullback was too strong. However, lower energy prices are needed for a rebound.

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