PreMarket Prep Stock Of The Day: Expedia Group

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

As a result of the coronavirus crisis and the corresponding stay-at-home orders being instituted worldwide, traders and investors have turned to day trading to supplement lost income or to pass the day. Many of those novice traders are getting roasted in shares of Expedia Group Inc EXPE, making it the PreMarket Prep Stock of the Day.  

The Catalyst For Expedia's After-Hours, Premarket Rallies

In search of trading ideas, these novice investors may be tuned into CNBC's "Closing Bell" for trading ideas. On Wednesday’s show, Josh Brown, who said he does not have a position in the issue, made some positive comments on Expedia following its abysmal first-quarter report. After the close, the company reported a first-quarter loss of $1.83 per share against a Street expectation of a $1.04-per-share loss.  

Sales of $2.2 billion missed the $2.29-billion estimate. 

Algorithms, Novice Traders Spring Into Action

In after-hours trading Wednesday following the report, Expedia initially spiked down to $77 from its day-end closing price of $79.58 and was attempting to rebound.

The issue was meandering at the $79 area when Brown made positive comments. Listen to Dick's commentary on the issue: 

Dick said he watched in awe as the issue rallied all the way to $83.67 over an hour before backing off. The high coincided with Expedia's March 11 high of $83.67. 

Traders Can't Get Enough Of A Good Thing

The unabashed buying continued off Brown’s comments in pre-market trading Thursday despite the broad market showing some weakness. 

The issue made a new high at $84.25 ahead of the open and began to drift lower — despite Expedia's colossal EPS miss. 

The Smart Money Steps In

Off a $3 higher open, Expedia rallied another 46 cents to $83.05, and then it was lights out. Large investors in the issue were not going to look a gift horse in the mouth and began to pound the issue on heavy volume.

After losing its opening price, Expedia went into a freefall and did not find support until it reached $75.14.

Expedia was trading down 2.2% at $77.83 at the time of publication Thursday afternoon. 

Expedia Moving Forward

Do your homework. Do not follow others into action unless you have a game plan, despite what is said on CNBC or other media sources. 

Of course, many short-term traders may have unloaded shares at a profit. There are probably many more who did not.

In reference to the shares of Expedia, the technical damage inflicted on the issue in today’s session is going to take days, weeks or even months to repair under the circumstances.