What Happened?
Shares of vacation ownership company Marriott Vacations (NYSE: VAC) fell 20.8% in the morning session after the company reported mixed third-quarter 2025 results that saw it miss Wall Street's revenue and profitability expectations, although it did beat on adjusted earnings per share.
The vacation ownership company's revenue fell 3.2% year-over-year to $1.26 billion, missing analyst estimates of $1.32 billion. Profitability was also a point of concern as Adjusted EBITDA, a measure of profit that excludes items like interest and taxes, came in at $170 million, nearly 8% below consensus. While the company's adjusted earnings per share of $1.69 was 5.6% ahead of expectations, the market appeared to focus on the top-line weakness and a miss on the number of conducted tours. Looking ahead, the company provided a mixed forecast, raising its full-year adjusted EPS guidance by 2.2% but issuing full-year EBITDA guidance that was below analyst expectations. The stock traded down significantly following the report.
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What Is The Market Telling Us
Marriott Vacations’s shares are somewhat volatile and have had 14 moves greater than 5% over the last year. But moves this big are rare even for Marriott Vacations and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 27 days ago when the stock dropped 3.2% on the news that worries over worsening trade relations with China were triggered by critical comments from President Donald Trump.
The President's comments, stating on social media that China has 'become very hostile,' have injected significant volatility into the broader markets. This has particularly affected the leisure industry, which is highly sensitive to economic sentiment and discretionary spending. Leisure stocks, which include companies in travel, entertainment, and hospitality, rely on consumers feeling confident enough to spend on non-essential goods and services. Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The president's tone and the suggestion of canceling a meeting with President Xi caused a rapid sell-off in the market. Earlier in the week, China announced new export controls on the critical minerals. Beijing's Commerce Ministry stated that foreign suppliers now need government approval to export products containing certain rare-earth materials. These materials are essential for producing high-tech goods, including computer chips, electric vehicles, and defense technology. Analysts viewed the move as a strategic assertion of China's dominance in the global rare earth supply chain, particularly amid ongoing trade tensions. The prospect of escalating tariffs raises concerns about economic headwinds, which could lead to a slowdown in consumer spending. If consumers tighten their budgets in response to economic uncertainty, discretionary purchases are often the first to be cut, directly impacting the revenues of companies in this sector.
Marriott Vacations is down 41.3% since the beginning of the year, and at $51.33 per share, it is trading 48.3% below its 52-week high of $99.25 from November 2024. Investors who bought $1,000 worth of Marriott Vacations’s shares 5 years ago would now be looking at an investment worth $450.71.
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