Image source: TripAdvisor.

TripAdvisor (NASDAQ:TRIP) shares were hammered in early November after the company missed earnings expectations for its third quarter. After those rough results, which followed other lackluster quarters over the past year, investors might be rightly wondering if the company's growth days are behind it. Here are three reasons TripAdvisor could have plenty of growth left after it undergoes its current transition. 

TripAdvisor's rough quarter

For the recent third quarter, TripAdvisor reported sales of $421 million, up just 1% year over year and missing guidance. Earnings for the quarter were flat from Q3 2015, and as a result, TripAdvisor's stock fell around 15%. After similar drops in January and August, the stock is now down 42% year to date.  

TRIP Chart

TRIP data by YCharts.

Three reasons the company could climb back up

TripAdvisor is in the middle of transition right now. From its early growth as a review site, TripAdvisors is working now to be a more substantial online booking agent. While the sales numbers above look discouraging, there are certainly some bright spots in the company's growth strategy that could help the stock to rebound. 

1. Instant booking: As TripAdvisor seeks to be a full-service online travel agent (OTA) competing more directly with companies like Priceline, it rolled out "instant booking" over the last year. Since many guests currently visit TripAdvisor to plan their trip, and then book the actual travel plans elsewhere, TripAdvisor hopes that this option to view reviews, then immediately book the airfare, accommodation, or whatever else was being reviewed will help customers to stay on TripAdvisor's platform for their whole transaction.

TripAdvisor is still improving and expanding this new offering, including how the option appears on different devices and what happens when TripAdvisor's partner sites can offer lower prices. The adoption of instant booking and its ability to increase sales has been slower than expected, but so far the numbers are encouraging. During Q3, conversions grew year over year in the U.S., where Instant Booking has now been live for more than a year, according to management during the earnings call.  

Image source: TripAdvisor / iTunes app store.

2. Mobile conversions: TripAdvisor management also said during the earnings call that about 50% of its traffic is from mobile devices. One of the most frustrating parts of TripAdvisor's earnings recently is the slow growth of mobile sales, not for lack of mobile visitors, but because of a low conversion rate. Earlier this year, TripAdvisor management said that mobile traffic converts only about 30% as well as desktop.

However, that looks like a growth opportunity for TripAdvisor to figure out how to increase that conversion and drive more sales from mobile users. Increased focus on mobile apps, which currently make up about half of mobile traffic, could help to increase conversions by having stored credit cards either in-app or through mobile wallet options linked to the users phone, as well as making TripAdvisor a service of choice by having its app right on a user's phone instead of having to start by searching in an online search engine. 

3. Cash for acquisitions: TripAdvisor has certainly been spending money in 2016 to help grow its instant booking platform and increase mobile conversions, and fortunately the company is in a good cash position to do so. Other than building out its own apps and updating its own platform, TripAdvisor has also been buying up smaller brands to help grow its total influence of the market. 

TripAdvisor now includes around 25 various brands, such as JetSetter and Viator, that all help to increase offers from hotels to luxury accommodations, tourist attractions, and much more. With plenty of cash and a solid balance sheet, TripAdvisor should be able to continue that acquisition strategy to increase its market share and diversification further. In the most recent quarter, the company had $756 million in cash and cash equivalents and less than $100 million in total debt. 

There will certainly be competitive risks for TripAdvisor going forward. One of the biggest risks is established hotel brands such as Marriott (NASDAQ:MAR) that are seeking to have customers book directly and avoid giving a cut of that booking fee going to third-party OTAs. As hotel brands use loyalty programs and included amenities to those that book directly, this could be a problem for TripAdvisor trying to grow as an OTA. Additionally, while TripAdvisor is transitioning from review site to also being a booking agent, many other booking agents are working to increase their own review offerings to also be a one-stop shop for customers.

Still, TripAdvisor is an industry leader with nearly 400 million monthly unique users, up 11% from this time last year, with user reviews and opinions that grew nearly 50% year over year to 435 million total by the end of the recent quarter. This shows that TripAdvisor is certainly still a top site for travelers, and by developing the three points above and completing its transition to a more full-service online review and booking site that better monetizes that traffic, TripAdvisor could have plenty of room to grow. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.