On July 11, Expedia (NASDAQ: EXPE ) launched a joint-marketing campaign with
daily-deal powerhouse, Groupon. The result? Well, it's actually been an
immediate hit as there have been about 15,000 travel deals sold. Hey, might as
well leverage Groupon's hyper-aggressive marketing, right? Such innovative
approaches have certainly helped Expedia. Yet with the recent market volatility,
the stock is down more than 13% for the past couple weeks. So can Expedia take
flight again? To see, let's take a look at the pros and cons: Pros Great
assets. Expedia has a strong portfolio of web sites, including Expedia.com,
Hotels.com and Howire.com. This has been mostly the result of effective
acquisitions. And yes, the company is continuing with its deal-making. As would
be expected, the big push is in emerging markets. Consider that Expedia is a
majority owner of eLong (NASDAQ: LONG ), which is an online hotel and air-travel
service in China. Mobile. This is the next big trend in online travel. The good
news is that Expedia has been aggressive. For example, the company's mobile
apps are downloaded roughly 36 times every minute. The mobile apps are available
for its main brands as well as the key mobile platforms, including Apple 's
(NASDAQ: AAPL ) iPhone and Google 's (NASDAQ: GOOG ) Android. Unlocking value.
By the end of the year, Expedia plans to spin off TripAdvisor. It's a smart
move because Expedia and TripAdvisor have different business models that is,
the TripAdvisor website provides travel reviews and relies on advertising
revenue. In fact, TripAdvisor is likely to fetch a robust valuation, much like
companies such as LinkedIn (NYSE: LNKD ) and Facebook. All in all, the spinoff
should help to streamline Expedia and allow management to focus on international
opportunities. Cons Competition. With the surge in venture capital, Expedia is
seeing many next-generation online travel sites emerge. Some examples include
Hipmonk and Triporati. These sites have been effective in leveraging things like
social networking and mobile interfaces. Expedia is also facing threats from
Internet giants, especially Microsoft (NASDAQ: MSFT ) and Google. Economy. The
travel industry is highly cyclical. Thus, if there is a double-dip recession, it
is likely to be a big problem for Expedia. High oil prices will also be a drag.
Travel ecosystem. Expedia uses so-called global distribution systems to make
travel reservations. While that has been an effective approach, it still has
risks. Basically, airlines are trying to find ways to lower the service's fee
levels, and Expedia already has had a three-month battle with American Airlines
parent AMR (NYSE: AMR ) over the issue. Verdict Expedia is certainly showing
lots of traction. The international business is paying off and the company
continues to focus on innovation. However, the macroeconomic environment is
definitely shaky. If there is a falloff in activity, it could ding the share
price. In light of these factors, the cons outweigh the pros on the stock. Tom
Taulli's latest book is "All About Short Selling" and he has an upcoming
book called "All About Commodities." You can find him at Twitter account
@ttaulli . He does not own a position in any of the stocks named here.
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