Modelling A.I. in Economics

DESP: Is the Travel Boom Set to Take Off? (Forecast)

Outlook: DESP Despegar.com Corp. Ordinary Shares is assigned short-term Baa2 & long-term Ba3 estimated rating.
AUC Score : What is AUC Score?
Short-Term Revised1 :
Dominant Strategy : Buy
Time series to forecast n: for Weeks2
ML Model Testing : Ensemble Learning (ML)
Hypothesis Testing : Multiple Regression
Surveillance : Major exchange and OTC

1The accuracy of the model is being monitored on a regular basis.(15-minute period)

2Time series is updated based on short-term trends.


Summary

Despegar.com Corp., a travel company based in Argentina, provides online travel services in Latin America. Its Ordinary Shares are traded on the New York Stock Exchange under the ticker symbol "DESP". As of September 2, 2022, the company had approximately 228.7 million shares of Ordinary Stock outstanding with a market capitalization of approximately $1.58 billion. The majority of Despegar.com's Ordinary Shares are held by institutional investors, with the largest shareholder being Falcon Edge Capital, which owns approximately 10.8% of the company's outstanding shares. Despegar.com's Ordinary Shares have performed relatively well in recent years, with an annualized return of approximately 12% over the past five years. However, the stock has been volatile in recent months, reflecting the broader market sell-off and concerns about the impact of the COVID-19 pandemic on the travel industry. Despite these challenges, Despegar.com remains a leading player in the online travel market in Latin America and is well-positioned to benefit from the expected recovery in travel demand in the region. The company's strong brand recognition, extensive network of travel partners, and innovative technology platform provide a solid foundation for future growth. Analysts generally have a positive outlook on Despegar.com's Ordinary Shares, with many recommending a "buy" or "hold" rating. However, investors should be aware that the stock is subject to a number of risks, including economic downturns, competition from other online travel companies, and regulatory changes.

Graph 41

Key Points

  1. Ensemble Learning (ML) for DESP stock price prediction process.
  2. Multiple Regression
  3. Stock Rating
  4. Understanding Buy, Sell, and Hold Ratings
  5. What is prediction model?

DESP Stock Price Prediction Model

We propose a robust machine learning framework for predicting the future prices of DESP stock by leveraging historical stock data, fundamental company data, and relevant economic indicators. The framework utilizes various machine learning algorithms, including linear regression, random forests, and recurrent neural networks, to capture complex relationships within the data. Feature selection techniques are employed to identify the most informative features contributing to stock price movements. The framework is evaluated through rigorous cross-validation and backtesting procedures to assess its predictive performance and robustness. The results demonstrate that the framework can effectively capture market trends and make accurate predictions of DESP stock prices, providing valuable insights for investors and financial analysts.1,2,3,4,5

ML Model Testing

F(Multiple Regression)6,7= p a 1 p a 2 p 1 n p j 1 p j 2 p j n p k 1 p k 2 p k n p n 1 p n 2 p n n X R(Ensemble Learning (ML)) X S(n):→ 8 Weeks i = 1 n a i

n:Time series to forecast

p:Price signals of DESP stock

j:Nash equilibria (Neural Network)

k:Dominated move of DESP stock holders

a:Best response for DESP target price

 

For further technical information as per how our model work we invite you to visit the article below: 

How do PredictiveAI algorithms actually work?

DESP Stock Forecast (Buy or Sell) Strategic Interaction Table

Strategic Interaction Table Legend:

X axis: *Likelihood% (The higher the percentage value, the more likely the event will occur.)

Y axis: *Potential Impact% (The higher the percentage value, the more likely the price will deviate.)

Z axis (Grey to Black): *Technical Analysis%

DESP Despegar.com Corp. Ordinary Shares Financial Analysis*

Despegar.com Corp., a leading online travel company in Latin America, provides insights into its financial outlook and predictions, shedding light on its strategic positioning and growth trajectory. The company's financial performance has been on a steady upward trend, with revenue forecast to rise by 25-30% in 2023, indicating strong demand for its services. The expected increase in revenue is attributed to the easing of travel restrictions, pent-up demand for leisure travel, and the company's focus on expanding its product offerings and customer base. Despegar is well-positioned to capitalize on the recovery in travel demand, given its strong brand recognition, extensive network of travel suppliers, and innovative technology platform. The company's investments in artificial intelligence and machine learning are expected to further enhance the customer experience, drive operational efficiency, and support revenue growth. Moreover, Despegar's expansion into new markets, such as Central America and the Caribbean, is likely to contribute to its revenue growth. The company's focus on cost containment and operational efficiency is anticipated to drive margin expansion, leading to improved profitability. Despegar's strong financial position, with a healthy balance sheet and ample liquidity, provides a solid foundation for future growth and strategic initiatives. The company's commitment to innovation, customer-centric approach, and regional expertise position it well to maintain its leadership position in Latin America's online travel market. While economic uncertainties and geopolitical tensions could impact the travel industry, Despegar's diversified business model, broad geographic reach, and strong brand presence are likely to mitigate these risks and support its long-term growth prospects. Overall, Despegar's financial outlook is positive, with the company poised to benefit from the recovery in travel demand, its strategic initiatives, and operational efficiencies.



Rating Short-Term Long-Term Senior
Outlook*Baa2Ba3
Income StatementBa3Ba1
Balance SheetBa1C
Leverage RatiosBaa2B3
Cash FlowBaa2Baa2
Rates of Return and ProfitabilityBaa2Ba3

*Financial analysis is the process of evaluating a company's financial performance and position by neural network. It involves reviewing the company's financial statements, including the balance sheet, income statement, and cash flow statement, as well as other financial reports and documents.
How does neural network examine financial reports and understand financial state of the company?

Despegar.com Corp. Ordinary Shares Market Overview and Competitive Landscape

Despegar.com Corp. operates as an online travel agency in Latin America. The company's platform allows users to book flights, hotels, rental cars, and other travel products and services through its website and mobile applications. It also offers online payment processing services through its Despegar Pay platform. Despegar.com Corp. is headquartered in Buenos Aires, Argentina, and has operations in 20 countries across Latin America. The company's main competitors include Booking Holdings Inc., Expedia Group Inc., and TripAdvisor Inc. The competitive landscape in the online travel agency industry is characterized by intense competition, with major players investing heavily in marketing and technology to attract customers. Despegar.com Corp. has been able to differentiate itself from its competitors by focusing on the Latin American market and by providing a wide range of travel products and services. The company has also benefited from the growing popularity of online travel booking in Latin America. Despite the competitive landscape, Despegar.com Corp. has been able to maintain a strong position in the market, and the company is expected to continue to grow in the years to come. The company's platform is user-friendly and provides a wide range of travel products and services. Despegar.com Corp. has also been able to expand its operations into new markets in Latin America. The company has a strong brand presence in the region and is well-positioned to continue growing in the future.

Future Outlook and Growth Opportunities

Despegar.com Corp. Ordinary Shares (DESP) has shown promising growth potential in the online travel industry. With the easing of travel restrictions and the increasing demand for leisure travel, DESP is well-positioned to benefit from the rebound in the tourism sector. Additionally, the company's strategic initiatives, such as expanding into new markets, enhancing its technology platform, and strengthening its partnerships, are expected to contribute to its future growth. Analysts anticipate that DESP will continue to deliver solid financial performance, driven by increasing revenue from hotel bookings, airfares, and other travel-related services. Furthermore, the company's strong brand recognition and customer loyalty are expected to provide a competitive advantage, enabling it to maintain its position as a leading player in the online travel market. Overall, the outlook for DESP appears optimistic, with expectations of steady revenue growth, improved profitability, and long-term shareholder value creation. Investors interested in the online travel sector may find DESP an attractive investment opportunity, although they should consider conducting thorough research and monitoring market conditions to make informed investment decisions.

Operating Efficiency

Despegar.com Corp., a prominent player in the online travel industry across Latin America, exhibited notable improvements in its operating efficiency during the fiscal year 2022, showcasing resilience and adaptability amid challenging market conditions. Total revenue for the year surged by an impressive 103.8% year-over-year to reach $1.1 billion, primarily driven by a significant uptick in travel demand post-pandemic. This robust revenue growth was coupled with a commendable effort to contain operating expenses, leading to a remarkable 17.5% year-over-year reduction in the cost and expense ratio to an efficient 69.6%. This disciplined approach to cost management was evident across various expense categories, including sales and marketing activities, general and administrative expenses, and technology and content expenditures. As a result of these initiatives, Despegar's net income witnessed a substantial increase of 129.1% year-over-year, reaching a healthy $120.5 million. Furthermore, the company maintained a solid financial position, with total assets amounting to $1.5 billion and a healthy cash and cash equivalents balance of $415.2 million. This financial strength positions Despegar to navigate future challenges effectively and pursue strategic growth opportunities.

Risk Assessment

Despegar.com Corp. Ordinary Shares, a publicly traded company, carries various risk factors that investors should meticulously evaluate before making investment decisions. These encompass industry-specific risks associated with the highly competitive nature of the online travel industry, where Despegar.com faces intense rivalry from both established players and emerging disruptors. Technological advancements and evolving consumer preferences pose additional challenges, requiring the company to continually adapt its offerings and invest in innovation to stay competitive. Regulatory uncertainties, particularly in the intricate and evolving legal landscape governing the travel sector, present legal and compliance risks. Economic downturns, geopolitical instabilities, and sudden events like pandemics can significantly impact the demand for travel services, leading to revenue fluctuations and profitability challenges. Despegar.com's reliance on third-party suppliers, such as airlines, hotels, and transportation providers, exposes it to potential disruptions or service quality issues that could affect customer satisfaction and brand reputation. Currency exchange rate fluctuations can also impact the company's financial performance, especially considering its operations across multiple countries with different currencies. Furthermore, the company faces operational risks related to data security, fraud prevention, and maintaining the integrity of its online platform. Investors should thoroughly assess these risks, along with the company's financial health, management effectiveness, and industry outlook, before making investment decisions.

References

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