Uber Technologies has considered a possible bid for travel website Expedia, the Financial Times reported Wednesday night. Uber stock fell Thursday while Expedia jumped.
Such a move would significantly expand Uber's business, which is largely ride hailing and food-delivery, though it also has freight operations and flight and train bookings in some markets. Uber has reached out to advisors about a Expedia takeover, the FT reported, citing three sources. The ride-hail giant's interest is in the early stages, the sources noted, with no formal outreach to Expedia or ongoing talks.
Uber stock analysts debated the merits of the rumored deal Thursday, with at least one skeptical that it made sense for the ride-hailing giant.
Uber CEO Dara Khosrowshahi served as Expedia CEO from 2005 to 2017. He's still on Expedia's board.
Uber Stock Falls On Expedia Deal Buzz
Uber stock fell 2.4% to 79.90 in recent action on the stock market today. Shares fell 1.6% to 81.90 on Wednesday, a third straight decline. On Oct. 11, Uber surged 10.8% to a record high, breaking out past multiple buy points after the "toothless" robotaxi event from Tesla.
As of Wednesday's close, Uber stock has undercut the top of the consolidation at 82.14. But shares remain above a handle buy point of 78.45.
Futures: Why These Stocks Are Radioactive
Expedia stock, meanwhile, jumped 4.75% to 158.01 on Thursday. The travel booking site is extended from a 142.42 buy point from a nine-month cup-with-handle base, but has forged a three-week tight with a 153.83 entry. The tight pattern could be viewed as an alternate entry to the long consolidation.
Expedia stock is trading at a two-year high.
Expedia stock has a $19.64 billion market cap as of Wednesday's close, though a deal would almost certainly come with a premium. Uber has a $172 billion valuation.
Uber Stock Analyst Skeptical
In a client note Thursday, Truist analyst Youssef Squali wrote he was skeptical of the transaction for Uber. He rates Uber stock a buy.
The rumored deal, Squali wrote, does not align with Uber's stated goal to use acquisition as a growth driver. Expedia's current and projected growth rate is materially below that of Uber's, he added.
"While Uber's CEO is very familiar with Expedia's business ... it is not very clear to us how this combination would lead to a 'superior Uber,' even if it helps advance the company's 'super app' aspirations," Squali wrote. "In fact, we believe it risks distracting Uber's management from its core operations (which they've improved materially over the last two years) amid intense global competition and the risk posed by autonomous vehicles over time."
Similar Business Models: Analyst
D.A. Davidson analyst Tom White, meanwhile, wrote that he does not think acquiring Expedia "makes sense for Uber now, but we can understand why they are exploring it."
White, who rates Uber a buy, noted that Uber and Expedia have similar online marketplace business models.
"We believe the two businesses require similar high-level skill sets and could be integrated relatively easily," White wrote to clients. "For Expedia, the more frequent engagement/use-cases for Uber's products could help advance Expedia's ambitions around more direct traffic mobile app traffic and loyal/repeat customers."
But, he added, the deal could prove a distraction as Uber is already pursuing large markets such as grocery that are in "early innings."
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