Why TripAdvisor Inc. Got Clipped Today
Image source: The Motley Fool.
What happened
TripAdvisor Inc.(NASDAQ: TRIP) stock was getting poor reviews from investors today after the travel-information specialist posted a weak third-quarter earnings report. As of 10.47 a.m. EST, the stock was down 18.3%.
So what
TripAdvisor is in the middle of several strategic shifts, including traffic moving from desktop to mobile and building out a new business as a travel booking agent likePriceline andExpedia.That transition, though, has been more difficult than the company and analysts expected.
The once high-flying growth stock saw revenue increase just 1.4% in the quarter to $421 million, well below expectations of $439.4 million. On the bottom line, adjusted earnings per share were flat at $0.53, missing estimates by a penny.
Despite the weak performance, CFO Ernst Teunissen said revenue growth improved as well as metrics like transaction revenue per hotel shopperthroughout the quarter. He and CEO Steve Kaufer both underscored that the company was "investing for long-term growth." Still, click-based revenue fell 10% in the quarter, weighing on performance, while growth in non-hotel revenue counteracted it.
Now what
TripAdvisor did not issue guidance, and management's brief comments on the quarter indicate that the company is disappointed with its own results. The stock was a big winner following its 2012 IPO, but shares are down 38% as its quarterly results have consistently disappointed and the company's strategy has not unfolded as expected. The surprise election of Donald Trump also throws more uncertainty into the mix as the travel industry is one of the most sensitive to macroeconomic factors.
TripAdvisor shares remain pricey at a P/E above 30, meaning the stock should keep falling if growth continues to stall.
10 stocks we like better than TripAdvisor When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now...and TripAdvisor wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of November 7, 2016
Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends TripAdvisor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.