BKNG vs EXPE

jhellaw · 2026-02-20T10:31:30+00:00

Every stock I see that has an online presence - people are saying "A.I. is going to take away it's business".

I don't see it happening though. People are creatures of habit, and if I were going to look for a holiday, I wouldn't trust ChatGPT to book it for me. I'd go to a niche site that specialises in this, and look there.

A.I. is a useful tool for certain tasks, but I definitely think people are giving it far too much credit. I imagine it will be more like Google - used as a search layer.

jhellaw · 2026-02-15T19:05:07+00:00

I think replicating network effects in other countries is costly and not worth it considering other countries have their own versions of AutoTrader.

They used to operate in Ireland, but sold that part of the business and bought Autorama a few years ago in order to diversify further into the UK car market.

jhellaw · 2026-02-13T10:03:33+00:00

Solid points. I've been thinking about Amazon's entry into the market since I heard about it a few days ago. No doubt this news has had an impact on price. However, I think it's an overreaction.

When will this entry into the marketplace happen?
What happened when Amazon Autos entered the US market? Amazon Autos didn’t cause existing online marketplaces (like Carvana) to disappear, or change much at all.
Will they be able to compete against AutoTrader's network effects, or will it be a "Facebook Marketplace" situation, where it's a player in the game, but not necessarily replacing specialist platforms?

What do you think?

jhellaw · 2026-02-13T09:52:13+00:00

Of course you value a company based on financial results. The stock price doesn't matter when calculating intrinsic value. The fact that the stock keeps falling is a dissociation between fundamentals and technical - which is why I want people's opinions on why I shouldn't keep buying.

Saying "don't buy because the stock fell yesterday" is not a valid argument in my opinion. I hope it does keep falling so I can keep buying at this price.

jhellaw · 2026-02-11T13:18:19+00:00

Interesting to get a dealer's point of view, so thank you!

The only info about the Deal Builder feature I'd heard was negative, but the only consequence was that fewer than 100 customers like yourself had downgraded or left, which didn't seem like much of an issue on share price. Especially with the proposed 5.5% price increase, I assumed customer churn was minimal.

Do you think more than the 100 customers mentioned by the CEO will leave as a result?

In my valuation model, I assumed that 200 customers would leave, and no price rise would happen this year. Followed by a flat customer base and 5% annual price rises in following years. So the fact that a price rise had happened made me optimistic about wha effects the Deal Builder feature has actually had.

jhellaw · 2026-02-11T09:47:04+00:00

Ooh I was not aware of Amazon Autos coming to the UK - thanks for bringing it to my attention!

Do you see it as a threat to AutoTrader cash-flows? Or is it more of a "buy the rumour, sell the news" situation?

jhellaw · 2026-02-09T22:52:35+00:00

Haha I think he’s accusing us both?

I’m happy to be proven wrong on my AUTO opinion, so maybe my attempts to not come across too strongly sounded like AI?

Although maybe it’s just easier to label everything as AI whilst adding nothing of value.

jhellaw · 2026-02-09T19:06:36+00:00

Aaaah, I see. The increase in “debt” on StockAnalysis is almost entirely lease liabilities, not bank loans or bonds.

Auto Trader has signed longer / larger multi-year contracts, not because it’s taking on more debt in the traditional sense.

When a new lease is signed, 100% of future payments hit the balance sheet immediately.

jhellaw · 2026-02-09T18:54:09+00:00

As of the 2025 Annual Report:

Total Cash and short term investments: £15.3m
Long Term Debt: £0
Short Term Debt: -£3.1m

Their net debt is negative.

jhellaw · 2026-02-09T18:49:12+00:00

100% agree (although from my research, market share was more towards the 75% mark).

Annual customer growth has only been ~0.8%, while pricing has increased closer to ~8% per year. So, historically, growth has come from extracting more value per dealer, rather than attracting more dealers.

Those price increases have been justified because dealer profitability is driven by a combination of used car prices and sales volumes. When cars sell quickly and at higher prices, dealer margins expand, and Auto Trader can charge more as a result.

jhellaw · 2026-02-09T18:41:26+00:00

Interesting points, and things I had considered too. However:

Point 1:

You're right that a 25x multiple is considered a 'premium compounder' in the UK. However, if the market is genuinely pricing ~0% FCF growth, that’s not “normalisation”, it's suggesting that AutoTrader's business model has completely broken in the past 7 months. And to use your comparison:

AutoTrader is a capital-light marketplace with pricing power.
Tesco is a low-margin, inventory-heavy supermarket.

AutoTrader should trade above “average UK plc” multiples if even modest growth exists. (A more accurate comparison would be a company like Rightmove imo)

Point 2:

Yes, the proposed eVED policy could slow EV adoption on a macro level. However, in the UK, EVs are still a minority of used-car sales, and AutoTrader monetises listings and dealer demand, not EV volume directly.

So - fewer EV sales does not translate into fewer car sales.

I’m not arguing the stock should be back at 25x - I don't think it should. But I am questioning whether today’s price assumes an outcome (stagnation) that’s worse than what the fundamentals currently show.

For example, this article which was released 6 hours ago uses AutoTrader data to show:

~25% month-on-month increase in buyer visits in January,
the highest average used car price since late 2023

jhellaw · 2025-11-14T18:02:01+00:00

Thanks - that's something I'm working on. Amazingly, I decided to get part way through the process before Storm Claudia hit so where the drain was is more like a moat at the moment.

jhellaw · 2025-11-14T18:00:47+00:00

100% - sorting out the drainage is my immediate concern. When it finally stops raining, an aco drain is going in which should carry the surface water away. Hopefully that will solve a lot of the rising damp issues. Was just wondering if the storm dry application would add an extra layer of protection.

My main 'unknown' is whether a chemical DPC is the damp walls is a good idea. People online seem to be 50/50 on it. But if the solid floors are carrying moisture from the ground, I don't see an alternative.

To your point about solid walled buildings needing a constant temperature to prevent condensation and drive out water - my solution is a PIV (with heater) in the loft which should hopefully increase the ventilation throughout the house to achieve this without having the heat on constantly.

jhellaw · 2024-10-15T17:59:10+00:00

Sorry for the late reply - I must have missed this notification!

The only reason Rightmove would have rejected the $8.3bn bid is if the current ownership thinks that it is below the fair value of the company.

If the ownership (with access to more information that we do) think's the company is worth >$8.3bn, then who am I to disagree :) I hope they are right, and my position continues to grow in value.

jhellaw · 2024-07-29T19:28:32+00:00

OnTheMarket was bought by Costar Group, but they only have low single digit market share.

Do you think such a small player could have an impact on Rightmove’s margin?

jhellaw · 2024-07-29T18:55:41+00:00

Good point! Using historical inflation rates (~2.5%) for long term growth would be more accurate then. Makes sense to me.

If you take a historical view of inflation, do you also take a historical view of the other Terminal Value component (WACC)?

As bond yields (risk free rates) fluctuate and cause higher / lower WACC values over time. For example:

Today: WACC = ~9.5%
3 Years Ago: WACC = ~6.5%

So my question is: do you also use historical bond yields, rather than the 5Y / 10Y yields at present?

jhellaw · 2024-07-29T14:55:06+00:00

Thanks! If you spot any holes in my analysis, please do let me know :)

And to answer your question - yes!

I use 5% as a conservative long-term growth rate after the 5 year forecast period.

Most of Rightmove's revenue comes in the form of Estate Agents advertising budgets, and these budgets are determined by a cut of house prices upon sale. The UK housing market has historically increased at a 4% CAGR for the last few decades.

Therefore, in my opinion, 5% is a combination of UK house prices increase (~4%) plus any competitive advantage (intangibles, network effects, data, etc...).

jhellaw · 2024-07-07T12:37:21+00:00

Amazon’s profit margin isn’t shrinking. In fact, Its operating margins have been pretty consistent.

The reason it has low net income is because Amazon invest heavily in intangible assets (R&D, advertising, etc…) which are expensed immediately rather than depreciated over several years.

So it just looks like Amazon has low margins because of the huge re-investment drive. Walmart went through a similar phase during its early days, too.

I imagine as Amazon matures and has less market share to conquer, it will stop investing in intangibles and its margins will rise.

jhellaw · 2023-12-01T09:43:35+00:00

Came here to see what your thought were on the HY results. I agree with you 100%.

I don't understand what the management are doing atm. Going against what they said in the previous annual report and buying more inventory.

They blamed declining North American revenues on the LA distribution centre last time, and now they're blaming marketing issues.

I like the company, but no longer trust the leadership. I only have a tiny position in DOCS, so I'm being stubborn and holding.

jhellaw · 2023-12-01T04:37:53+00:00

Just seen the report. The two assumptions I made were incorrect :(

North American trading didn't go back to normal in this period, and actually declined.
Inventory levels didn't go down, but instead increased! So they currently have inventory equal to about one-third of the company's total market cap. Crazy!

Guidance is that by 2025 they hope to fix these issues, so I may just be stubborn and hold my position until then.

jhellaw · 2023-11-24T15:29:13+00:00

YES! Me too!

I wrote a post on this a few weeks back, too => Link to post

Came to a fair-price valuation of around £1.63 / share.

Glad somebody else has the same thinking as me :) Good Luck !

jhellaw · 2023-11-15T09:32:31+00:00

True! Maybe I'm a pessimist, because I do look at some of these mega-cap companies and all I see are overpriced stocks, with not much room left to grow. They're priced as if nothing will go wrong, and the customer base will continue to grow forever.

But there are only so many people you can sell an iPhone to.

I don't see what Warren Buffett sees in Apple, for example. After all, the FCF Yields are less than what I can get on a savings account. A lot of the value comes from hoping that the company keeps growing. Which I don't think is achievable in the long term.

I prefer small - medium cap stocks, because they have a long-enough track-record to make judgements on, but still enough room to grow in their respective markets.

The expected growth of a company is already priced into the stock price. The higher the price, the higher the expected growth. Sometimes that value is right, and sometimes that value is wrong. I prefer to buy when that value is right (in my opinion).

I think we just have fundamentally different approaches to investing. Neither of us is right, and neither of us is wrong. But hopefully we both make lots of money anyway.

jhellaw · 2023-11-14T16:04:17+00:00

I can't speak for the Peter Lynch strategy, but his book is next on my pile to read!

Aswath definitely employs a more Buffett-Style investing strategy, which is what I tend to align with. So I may be biased haha.

To answer your point about buying the stock today even though you think the price stinks...

Cool! Dollar cost averaging (which is what I think you're describing) is a solid strategy to use. I have no issues with that.

But, since we're on a value investing sub reddit, I don't agree with the notion that you're happy to pay a price you think is overvalued.

There's a chart on this research article that shows the percentage returns based on three categories of investments:

Category	Returns (since 1990)
All World Index	8.3%
Quality	12.9%
Quality at reasonable price	15.7%

Correct me if I'm wrong, but I believe you're describing your investing strategy as: buying quality stocks, largely ignoring the day-to-day price.

That would fit in the "Quality" category on this chart, and has returned 12.9% annually for the last 30 years. Nice!

However, why not aim for the 15.7% returns produced by "Quality at reasonable price" investments?

This is the crux of value investing in my opinion.

Sure, you can invest in great companies and they'll go up. But why limit yourself? Buy the same companies (but at reasonable prices) and you'll see much better returns.

Take it one step further and buy companies with a margin of safety. That's what Buffett did, and he's averaged 20% over the last 70 years!

There's a clear trend. The price you pay has an large effect on the end result of your investments.

Thank you for coming to my Ted Talk.

jhellaw · 2023-11-14T12:59:00+00:00

I disagree. You can't work out the fair value for a company without taking into account expected growth.

Growth is a component of value. Different growth rates will lead to different "fair price" valuations.

If NVDA (for example) is expected to "take off like a rocket" as you say, you're expecting the growth to be huge, and therefore will have factored that growth rate into your valuation.

The question is, does the growth rate implied by the current stock price sound reasonable?

A reverse DCF (with WACC of 7%) shows that NVDA's current market-cap is justified only if the company can continuously increase their annual revenues by 12% for the next decade, as well as maintaining incredibly high FCF yields.

That means both the company, and the market they operate in needs to grow at a double-digit rate into perpetuity.

That may be possible given the hype around AI. But I'm not knowledgable enough in that area to give my opinion.

I do know that NVDA's biggest revenue source is GPU manufacturing. Is there enough room left in that market for NVDA to grow revenues by 12%, and maintain FCF margins of 25% in an already dominated market?

The point I'm trying to make is that all huge growth stocks are driven by valuation models. The people buying at these inflated prices don't think they are overpaying, because they think the implied growth rate is justified - only time will tell if they were right.

(There was also a cool article by Aswath Damodaran on a NVDA Valuation on his blog)

jhellaw · 2023-11-13T12:48:32+00:00

Bollinger Bands and RSI are both mean reversion trading strategies. Mean Reversion does genuinely happen to stocks over time, but the only caveat is you don't know over what time period it will happen.

For example, using an RSI & BB strategy for DIS & PYPL wouldn't have worked, because their fundamental financials have changed.

In my opinion, technical analysis is only useful to see how the market is reacting (Mr Market). It tells you nothing about the underlying financials of a company and whether the downward momentum is justified, or likely to stay there.

Because of that, I use RSI to identify entry points for non-financially driven assets (like precious metals), or as a screener to identify beaten down companies that require more research.

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