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Why TripAdvisor Stock Fell 16% in December

By Demitri Kalogeropoulos - Updated Apr 14, 2019 at 10:17PM

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Investors took the market volatility as a chance to cash in some gains in the high-flying stock.

What happened

Online travel booking specialist TripAdvisor (TRIP 5.57%) trailed the market last month by dropping 16% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline was a weak end to an otherwise great year for shareholders, with TripAdvisor stock up 56% in 2018 to end as one of the S&P 500's biggest winners.

A couple using a smartphone in a hotel room.

Image source: Getty Images.

So what

December's swoon appears to have everything to do with the stock's large run-up in prior months rather than any growing concerns on the part of investors. As a tech company, and the fourth best-performing stock on the market in 2018, TripAdvisor was positioned for unusually large declines when market volatility struck as it did in December. Yet shares outperformed the market, and peers like Booking Holdings, by a wide margin.

Now what

Volatility will cause stock unpredictable price swings at times, but investors' returns will ultimately be driven by the company's operations. For now, TripAdvisor's rebound appears well established, with profitability spiking over the last few quarters and sales growth returning in the core hotel shopping segment as the new attraction business gains steam. Continued progress along these lines, starting with a strong fourth-quarter report in early February, would ensure that December's drop was just a temporary step back for TripAdvisor stock.

Check out the latest TripAdvisor earnings call transcript.

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