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Why TripAdvisor Inc Stock Is Down 19% So Far This Year

By Jeremy Bowman – Jul 19, 2016 at 3:46PM

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The online travel review company was hit by the market sell-off at the beginning of the year along with a weak earnings report.

Image Source: Getty. 

What: With 2016 now halfway in the books, TripAdvisor Inc (TRIP 0.97%) stock is down 19% after getting hammered by the broad-market sell-off earlier in the year. As the chart below shows, the stock was down more than 35% in February, and has struggled to recoup those losses even as the S&P 500 hits all-time highs.

TRIP Chart

TRIP data by YCharts.

So what: The travel review site and its online travel agency peers, Expedia (EXPE 0.61%) and Priceline (BKNG 0.77%), tend to fall sharply on concerns about a global economic slowdown. Travel is a discretionary industry and sensitive to macroeconomic trends. As stocks plummeted at the beginning of the year on falling oil prices, a strong dollar, and other issues, TripAdvisor and its elevated valuation got hit particularly hard, falling 22% in January, though there was little company-specific news out.  

The stock bounced back on February 11, gaining 12% on a strong fourth-quarter earnings report. Earnings per share increased 29% to $0.45,  above estimates at $0.33, though revenue growth slowed to 7%, in part due to currency translation.  

Its first-quarter report was not so stellar, however. Revenue actually fell 3% to $352 million, missing expectations at $370 million, while earnings were well below the mark as well. 

Now what: TripAdvisor's big push recently has been into an instant booking platform, bringing it into direct competition with Priceline and Expedia, though Priceline agreed to add its listings to the platform. 

While a recent decline in click-based advertising is threat, TripAdvisor's long-term business still seems strong. The company occupies a unique space in the online travel industry as the clear leader in reviews, and could make an appealing buyout target for Priceline, which has a history of growing through acquisitions. I'd expect TripAdvisor to bounce back when it reports second-quarter earnings in early August. 

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Priceline Group and TripAdvisor. 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.

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Stocks Mentioned

TripAdvisor Stock Quote
$19.83 (0.97%) $0.19
Booking Holdings Stock Quote
Booking Holdings
$1,984.63 (0.77%) $15.18
Expedia Stock Quote
$101.50 (0.61%) $0.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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