Buying $BKNG Into the AI Fear
Opened a small position in Booking Holdings at $148.11. Starter size, 0.5% of the portfolio.
The stock is down roughly 24% over twelve months. It did a 25-for-1 split in April, and the split-day price was around $166, so I'm buying below where it opened post-split.
The reason it's cheap is the AI disruption story. The fear is that chatbots and agents eat the online travel agency model by letting people book directly. That's a real risk and I'm not dismissing it. But the business hasn't shown it yet. Q2 beat on both lines, $7.35B revenue against $7.18B expected, room nights up 5%, gross bookings up 9%. Management is still guiding mid-teens adjusted EPS growth for the year.
What I like: 17x forward earnings on a business with a 220-country footprint, Booking.com, Priceline, Agoda, Kayak and OpenTable under one roof, and $21.8B left on the buyback authorization. That's a well below where this has historically traded.
Essentially I'm paying a discounted multiple for a franchise the market has decided is structurally threatened. If that threat turns out to be slower and smaller than feared, the multiple alone does the work.
Q3 earnings land November 3. I kept the size small deliberately because I want to see the room night and gross booking trends before adding.
NFA. DYOR.
