Booking Holdings Inc. (BKNG): A Bull Case Theory

We came across a bullish thesis on Booking Holdings Inc. on Nikhs’s Substack. In this article, we will summarize the bulls’ thesis on BKNG. Booking Holdings Inc.'s share was trading at $5,085.22 as of January 28th. BKNG’s trailing and forward P/E were 33.54 and 19.12, respectively according to Yahoo Finance.

Booking Holdings Inc. (BKNG) is undergoing a transformative shift from a traditional online travel agency into a fintech-style payments infrastructure, a change that Wall Street has largely overlooked. Currently, 72% of bookings run through its merchant-of-record model, up from 50% two years ago, allowing Booking to collect payments upfront, hold them, and settle later. This structural shift generates incremental revenue faster than associated costs, delivering fintech-like margins with 47% EBITDA this quarter, while providing working capital advantages and payment float.

The merchant model also powers the Genius loyalty program and Connected Trip bundling, increasing customer lifetime value, reducing churn, and reinforcing network effects across hotels, flights, and cars. Booking’s recent $457 million KAYAK impairment signals a deliberate move away from commoditized meta-search toward high-margin transaction infrastructure, which AI tools cannot replicate, highlighting the company’s competitive moat. Connected Trip adoption is growing in the mid-20% range, creating a flywheel where higher-margin, multi-vertical bookings justify customer acquisition spend and expand EBITDA further.

Despite Q4 room night guidance of 4-6%, management has raised Transformation Program savings targets and full-year EBITDA guidance, signaling healthy demand and operational leverage. Strategic advantages are further amplified by Booking’s proprietary data from 323 million quarterly transactions, regulatory barriers across 220 countries, and partnerships with AI platforms, allowing the company to capture transaction value even as AI commoditizes discovery.

With merchant mix poised to exceed 75% and Connected Trip penetration rising, Booking is on track to re-rate as a fintech infrastructure business, potentially driving EPS above $300 by FY 2027-28 and offering substantial upside relative to current market expectations. The market’s slow recognition of this shift presents a compelling entry point.

Previously, we covered a bullish thesis on Booking Holdings Inc. (BKNG) by Jimmy Investor in April 2025, which highlighted the travel rebound, diversified brand portfolio, AI-powered personalization, and strong 2024 financials. BKNG’s stock price has appreciated by approximately 11.19% since our coverage due to robust travel demand. Nikhs shares a similar thesis but emphasizes the fintech transformation, merchant-of-record model, and Connected Trip flywheel driving higher margins and working capital benefits.

Booking Holdings Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 95 hedge fund portfolios held BKNG at the end of the third quarter which was 92 in the previous quarter. While we acknowledge the risk and potential of BKNG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than BKNG and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.