Stress Testing EXPE: Historical Drawdowns and Macro Risks

Stress Testing EXPE: Historical Drawdowns and Macro Risks

Every seasoned investor knows that market shocks are inevitable. What matters is the depth of the hit. Historically, across 15 major crises, Expedia (EXPE) absorbs an average drawdown of -28% vs. the S&P 500's average decline of -16% over the same events.

If you are an investor in EXPE stock, you might be asking: if the macroeconomic environment fractures, how far can this stock actually fall?

One of the ways to understand this is to simply see how the stock has performed during past market crashes.

How Does It Handle Credit & Liquidity Crises?

2008-2009 Global Financial Crisis (Dec 2007 to Mar 2009)

• Excess housing leverage unwound, triggered by Lehman Brothers' September 15, 2008 bankruptcy. No bailout froze global financial plumbing overnight, shattering assumptions of institutional rescue.
• Commercial paper collapsed and money markets broke the buck. Banks stopped lending as unemployment hit 10%. Oil crashed to $35/bbl on evaporating demand.

EXPE stock experienced -81% drawdown during this event, compared to -53% for the S&P and None for bonds.

What Happens During Growth & Demand Scare?

2020 COVID-19 Crash (Feb 2020 to Apr 2020)

• A novel coronavirus triggered pandemic fears. Italy's healthcare collapse and a March 2020 Saudi-Russia oil price war signaled uncontainable disruption.
• Governments shut economies, triggering the fastest bear market in history. Unlimited QE and $2.2T fiscal stimulus drove a V-shaped recovery following vaccine development.

EXPE stock saw -62% drawdown vs -34% for the S&P and -0.7% for bonds.

How It Fares During Sovereign & Geopolitical Risk?

2025 US Tariff Shock (Feb 2025 to Jun 2025)

• The Trump administration announced 145% tariffs on Chinese imports on April 2, 2025, representing the most aggressive trade action since the 1930s.
• Equities and the dollar fell simultaneously, signaling lost confidence. Supply chain disruptions and small-cap input inflation drove broad declines, affecting nearly all sectors.

The drawdown for EXPE stood at -34% compared to -19% for the S&P and -3.8% for bonds.

Past Market Shock Drawdowns Summarized For EXPE

[1] Summer 2007 Credit Crunch: Subprime hedge fund failures froze interbank lending, prompting an emergency Fed rate cut.
[2] 2008-2009 Global Financial Crisis: Lehman's collapse froze global credit, crashing every asset class and spiking unemployment.
[3] 2010 Eurozone Sovereign Debt Crisis / Flash Crash: Greece's deficit revelation collapsed European banks and triggered the May Flash Crash.
[4] 2011 US Debt Ceiling Crisis & European Contagion: US credit downgrade and European sovereign stress triggered a broad risk-off selloff.
[5] 2013 Taper Tantrum: Bernanke's taper hint spiked Treasury yields, triggering emerging market capital flight.
[6] 2014-2016 Oil Price Collapse: OPEC refused to cut output, crashing crude from $100 to $26.
[7] 2015-2016 China Devaluation / Global Growth Scare: Yuan devaluation sparked global recession fears, crushing cyclicals and emerging markets.
[8] 2016-2017 Trump Reflation Bond Selloff: Trump's election spurred fiscal stimulus hopes, rotating capital from bonds into cyclicals.
[9] Q4 2018 Fed Policy Error / Growth Scare: Powell's hawkish comments and trade war fears triggered the worst December since 1931.
[10] 2020 COVID-19 Crash: Pandemic lockdowns caused history's fastest bear market before massive stimulus drove recovery.
[11] 2022 Inflation Shock & Fed Tightening: 9.1% CPI forced aggressive rate hikes, crushing both stocks and bonds simultaneously.
[12] 2023 SVB Regional Banking Crisis: SVB's rate-driven bond losses triggered a social-media bank run, seized by FDIC.
[13] Summer-Fall 2023 Five Percent Yield Shock: Strong economic data pushed 10-year yields to 5%, compressing yield-sensitive sector valuations.
[14] 2024 Yen Carry Trade Unwind: BOJ rate hike unwound yen carry trades, briefly crashing tech stocks globally.
[15] 2025 US Tariff Shock: 145% China tariffs crashed equities and the dollar on supply chain disruption fears.

So What Can You Do For Your Investments?

Panic is a failure of preparation. When a Credit & Liquidity Crises shock hits, EXPE will contract predictably. Recognizing this behavior as a mathematical feature rather than a flaw allows investors to avoid selling at the exact wrong moment.

Incorporating a rule-based and diversified approach, such as the Trefis High Quality Portfolio (HQ), ensures your capital is protected enough to ride out these inevitable structural resets. HQ has returned > 105% since inception.