Expedia Group (NASDAQ:EXPE) shares declined 2.7% in premarket trading after Morgan Stanley initiated coverage of the online travel company with an Underweight rating and a $235 price target.
The target represents approximately 20% downside from Expedia’s previous closing price. Morgan Stanley cited slowing user growth and competitive positioning among its reasons for the rating.
The initiation followed several more favourable analyst assessments issued after Expedia’s second-quarter 2026 earnings report.
Morgan Stanley Highlights Slowing User Growth
Morgan Stanley identified user engagement as a central consideration in its assessment of Expedia.
The bank reported that Expedia’s monthly active user growth slowed to 0% in the second quarter of 2026, compared with growth of 6% at Booking.com and 10% at Airbnb during the same period.
The figures indicate that Expedia’s user base was broadly unchanged while the two competing platforms recorded increases.
Morgan Stanley also examined differences in the companies’ travel inventories.
The bank noted that Expedia’s offerings are concentrated in chain hotels and air travel, which it considers less differentiated than other types of accommodation and travel inventory.
According to Morgan Stanley, these categories could face greater competition from AI-powered travel tools as consumers adopt alternative methods of searching for and booking trips.
The bank placed Expedia at the lower end of its competitive assessment of consumer supply differentiation.
Rating Contrasts With Earlier Analyst Assessments
Morgan Stanley’s initiation differed from recent assessments by other Wall Street firms.
Evercore ISI, BTIG and Oppenheimer had previously issued more favourable ratings or price targets above Expedia’s prevailing share price following its second-quarter earnings announcement.
Expedia had also raised its full-year guidance after reporting its quarterly results.
The differences between the analysts’ assessments reflect contrasting views of the company’s operating performance, competitive position and potential growth.
Expedia Underperforms Broader Market in Premarket Trading
Expedia’s 2.7% premarket decline occurred while the S&P 500, Dow Jones Industrial Average and Nasdaq were showing modest gains.
The relative performance coincided with Morgan Stanley’s coverage initiation, although the report did not establish that the rating was the sole cause of the share price movement.
The bank’s $235 target and concerns about user growth introduced a different assessment of Expedia’s prospects following its recent earnings performance and increased full-year guidance.