Shares of online travel agency Expedia (NASDAQ: EXPE) took flight in early Wednesday trading. Prices surged as much as 10% initially and were still up 7% as of 11:15 a.m. EST after the company filed an 8-K report with the SEC announcing "the resignation of Mark Okerstrom as CEO and a member of the Board of Directors" and also of "CFO Alan Pickerill, effective immediately."
The stock remains down 16% over the past year, and it's still underperforming the S&P 500 by more than 30 percentage points -- but today's news has at least erased some of those losses.
Image source: Getty Images.
Those losses in stock price probably explain why investors are so thrilled to hear of the management shake-up. If the old CEO and CFO couldn't get the job done at Expedia, the hope is that new management might.
And today's 8-K filing lends itself to that interpretation.
As Expedia explained in its statement, "we share and understand the investment community's unhappiness with our third quarter results and how 2019 has shaped up overall." But "senior management and the Board disagreed on strategy," you see. This change in management, therefore, does appear to promise a change in how the company is run.
Going forward, Expedia will aim to restore "focus" to the company's current operations and improve its "near-term outlook" -- perhaps even permitting the company to "accelerate growth in 2020."
Ensuring that happens will be Chairman of the Board Barry Diller and Vice Chairman Peter Kern, who, in the near term at least, will be "managing day-to-day operations" while the board finds replacements for the departing CEO and CFO. Demonstrating confidence that they will succeed in both these things, Expedia announced that it is upping its share buyback plan by a further 20 million shares (now 29 million shares total) so as to reap extra profits as the turnaround progresses.
Investors appear heartened by the news and are bidding up Expedia shares accordingly.
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