BKNG stock soars: Is it still a buy for long-term investors?

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Booking Holdings Inc. (NASDAQ: BKNG), a global leader in online travel and related services, has seen its stock price surge significantly in 2024.

With the stock hitting an all-time high of $5,214.72 recently, many investors are questioning whether BKNG remains a strong long-term investment. This article dives deep into BKNG’s stock characteristics, historical performance, profitability, and future outlook to help potential investors make an informed decision.

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What Kind of Stock is BKNG?

BKNG is a growth stock, primarily appealing to investors seeking exposure to the online travel industry. As the parent company of major platforms like Booking.com, Priceline, Agoda, and Kayak, BKNG has capitalized on the global shift toward digital travel booking.

The company benefits from robust cash flows and increasing adoption of its “Connected Trip” strategy, which integrates multiple travel services for users.

• Sector: Technology and consumer discretionary.
• Core Business: Facilitating travel bookings, providing data-driven insights, and connecting travelers with global services.
• Risk-Reward Profile: While BKNG is seen as a relatively stable tech-driven stock, its valuation reflects significant optimism, potentially exposing it to market corrections.

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Has BKNG Stock Ever Split?

No, BKNG has never undergone a stock split. Despite its high nominal price per share (exceeding $5,000), the company has opted against splitting its stock. This decision aligns with its strategy of targeting institutional investors and long-term stakeholders rather than focusing on retail trading volume.

While stock splits are common among tech giants to make shares more accessible, BKNG’s high share price reinforces its premium image and institutional appeal.

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What is the Profitability of BKNG Stock?

BKNG reported remarkable profitability in its latest financials:

• Revenue: $8 billion for the most recent quarter.
• Net Income: $2.5 billion, equating to a profit margin of 31.5%.
• Earnings Per Share (EPS): The company has consistently beaten analyst expectations, showcasing its ability to drive growth and maintain efficiency.

These robust figures underscore Booking Holdings’ dominance in the online travel industry. Its profitability is driven by strong consumer demand for travel, higher average booking values, and an increasing reliance on AI to optimize customer experiences.

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Price Prediction for BKNG Stock

Analysts remain divided on BKNG’s future performance:

1. Bullish View: Optimistic projections suggest BKNG could reach $5,500–$6,000 in the next 12 months, supported by its leadership in the online travel market, continued global travel recovery, and innovations in service offerings.
2. Bearish View: Skeptics argue that BKNG is overvalued, with a fair value closer to $4,715, according to discounted cash flow (DCF) models. This discrepancy raises concerns about a potential correction if market conditions deteriorate.

For long-term investors, BKNG’s ability to consistently innovate and capture market share positions it as a solid hold. However, its current valuation necessitates caution for new buyers.

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Key Considerations for Long-Term Investors

• Strengths: BKNG benefits from its global brand recognition, high-margin business model, and technological innovation.
• Risks: The stock’s valuation is premium, making it sensitive to macroeconomic headwinds or slower-than-expected travel recovery.
• Growth Drivers: Expanding into underpenetrated markets, leveraging AI-driven services, and scaling its “Connected Trip” strategy could propel future growth.

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Conclusion

BKNG’s recent rally underscores its position as a dominant player in the travel industry. While its high valuation demands careful consideration, the stock remains attractive for long-term investors betting on the sustained growth of online travel and associated services.

Before investing, individuals should weigh its historical resilience against current market dynamics and their own risk tolerance.

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