Expedia stock price surges 9% on a deal to raise $3.2 billion in fresh capital

Shares of Expedia Group (NASDAQ:EXPE) surged nearly 9% on Thursday after the travel company secured $3.2 billion in fresh capital to fight the consequences of the COVID-19 outbreak and travel restrictions.

Fundamental analysis: Expedia secures multi-billion funding 

Expedia, one of the world’s largest travel companies, said it will raise $3.2 billion in new capital - $1.2 billion in private placement of perpetual preferred stock and $2 billion in new debt financing. 

The travel giant has been forced to seek liquidity after the COVID-19 outbreak has created havoc in the global tourism industry. Apollo Global Management and Silver Lake, asset management firms, will provide equity investment and will both get a seat on Expedia's board. 

Last December, Expedia sacked since then-CEO Mark Okerstorm after Barry Diller, chairman of Expedia Group and owner of a controlling interest in the conglomerate, initiated a change at the helm as the recent reorganization of the company “had distracted the company’s leaders from near-term growth goals”.

Today, Expedia announced that it appointed Peter Kern, the vice chairman of the Expedia Group board, as the new CEO. Kern was practically running the company since December when Okerstorm was fired. 

The agreement, expected to close May 05, to raise new capital will reduce the pressure from Expedia to sell some of its non-core businesses, such as Egencia, Trivago, Despegar and Traveloka. 

Technical analysis: Stock trying to break out 

Shares of Expedia have gained nearly 9% today to hit the 4-week high above the $66 mark. The stock price previously hit a 8-year low in March.

The price action is trading within a triangle as the two trend lines are converging. With today’s gains, the buyers have now pushed the price action towards the resisting trend line, located near the $70 handle. A break of this level would open the door for a run towards the key resistance above $90.

Summary

Expedia stock price has gained more than 9% today after the travel giant secured more than $3 billion in fresh capital to fight the consequences of national lockdowns and travel restrictions.