Continue Reading Below
After TripAdvisor Inc (NASDAQ: TRIP) shares got shellacked Tuesday over a terrible earnings report, the travel-recommendation service recovered some of its losses as analysts mostly reasserted their optimism in the company's long-term prospects.
The stock was up 6% as of 2:57 p.m. EST.
There was no direct news on the stock, but recoveries like this are common after a big sell-off as shares were down 23.2% on Tuesday. TripAdvisor shares were actually trading down Wednesday morning, falling below $30, but the stock began surging shortly after noon EST as several banks maintained neutral recommendations on the stock. Among them were UBS, JPMorgan Chase, and Barclays, which cut its price target to $35, indicating it still sees an upside. Downgrades are common after reports like Tuesday's, but that was not the case here.
The stock may have also benefited from a short squeeze as 18% of the stock is sold short, and some short sellers may have closed out their bets after Tuesday's plunge.
Continue Reading Below
The bull thesis for TripAdvisor seems all but broken after Tuesday's report. The company's planned pivot to an instant-booking platform in direct competition with leading online travel agencies Priceline and Expedia has fizzled, and revenue growth and earnings have eroded as mobile ads have proven less lucrative than desktop ones. Though its Non-Hotel segment has shown promising growth, the bulk of the company's business still comes from the lagging Hotel segment.
With competition in the industry increasing as marketing spending is disproportionately going up across the board and Priceline is cutting back on referrals to platforms like Trivago and TripAdvisor, things look like they'll get worse for the travel-review site before they get better.
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 10 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 6, 2017
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Priceline Group and TripAdvisor. The Motley Fool recommends Trivago. The Motley Fool has a disclosure policy.