Please ensure Javascript is enabled for purposes of website accessibility

Can TripAdvisor Stock Keep the New Highs Coming?

By Rick Munarriz - May 17, 2018 at 10:32AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The online travel pioneer is hitting new 52-week highs this week, but things aren't as rosy as the stock chart suggests.

Don't look now, but TripAdvisor (TRIP 4.11%) is getting hot again. The online travel site's stock has soared 65% since bottoming out six months ago. The recovery has been gradual but steady. TripAdvisor stock has moved higher in four of this year's first five months. The shares hit another fresh 52-week high earlier this week.

Long-term investors aren't handing out high fives. The stock has shed more than half of its value since peaking four years ago. The shares soared 27% last week after TripAdvisor stepped up to post better-than-expected quarterly results, but crack open the hood, and this travel engine isn't firing on all cylinders. 

Computer keyboard with a TripAdvisor logo tab.

Image source: TripAdvisor.

Passing ships

Revenue rose a mere 1.6% in TripAdvisor's first quarter, and while analysts were holding out for a small decline on the top line, it's still a pretty pathetic showing for a company hitting new highs following that report. TripAdvisor has now gone 10 consecutive quarters without posting double-digit percentage growth in revenue.

The news gets better on the other end of the income statement, but even that isn't so rosy once framed in the proper context. Adjusted earnings rose 20% to $0.30 per share -- nearly double what Wall Street pros were targeting -- but it's still less than the $0.33 per share that it scored as a profit for the first quarter of 2016 and the $0.43 per share in adjusted net income it served up the year before that. 

TripAdvisor's business is stuck. Its flagship hotel business that accounts for 79% of its revenue continues to decline, including a 10% slide in click-based revenue for the period. The platform remains attractive to visitors researching getaways. It's reaching 433 million average monthly unique visitors, 12% ahead of last year's audience. Revenue isn't keeping pace with usage, so monetization remains a challenge. 

TripAdvisor's stock may seem to be doing great, and it managed to post top- and bottom-line growth in a quarter where analysts were bracing for declines. Growth continues to be uninspiring, and we know it's not the only lead generator for the travel industry that's seeing the value of its connections diminish

As great as TripAdvisor may seem to be doing if we go by its stock chart, this is far from perfect. We saw on Wednesday that analysts can't seem to agree on where the online travel site's stock goes from here, as one Wall Street pro downgraded the stock on the same day that another came through with a double upgrade. 

All hope isn't lost, here. TripAdvisor's leads remain valuable, and the same headwinds that have been suppressing monetization could turn into tailwinds in the near future. The platform's popularity continues to expand, and that will give it more clout as it dabbles in everything from actual bookings to other travel-related outlets. TripAdvisor is taking some steps in the right direction, and now it just needs to pick up the speed and intensity of those positive paces.

Rick Munarriz has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends TripAdvisor. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

TripAdvisor, Inc. Stock Quote
TripAdvisor, Inc.
TRIP
$24.84 (4.11%) $0.98

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

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
377%
 
S&P 500 Returns
123%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.