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Why TripAdvisor Stock Lost 21% in May

By Demitri Kalogeropoulos – Updated Jun 4, 2019 at 1:17PM

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Trends for first-quarter sales growth disappointed investors.

What happened

Online travel booking specialist TripAdvisor (TRIP 1.05%) trailed the market last month as shares lost 21% compared to a 7% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

The drop left TripAdvisor shareholders well behind broader indexes so far in 2019, down 17% compared to an 11% boost for the S&P 500.

A couple sitting on a dock and looking out across the water.

Image source: Getty Images.

So what

Investors weren't happy with TripAdvisor's first-quarter report, and they expressed that displeasure by sending shares lower immediately following the announcement. The results included a few potential warnings signs for the business, including weak sales growth and declining customer traffic in the core hotel booking segment. On the positive side, TripAdvisor's emerging "experiences" segment, which allows users to book products like tours, attractions, and restaurant reservations, continued to expand. The company also boosted profitability in the hotel division, with adjusted operating margin reaching 41% compared to 30% a year earlier.

Now what

CEO Steve Kaufer and his team still believe they can return to double-digit sales growth across the business over the next three to five years. However, weak booking trends in international markets will likely keep a lid on demand in the second quarter, just as they did in Q1. Thus, investors will have to wait until the second half of the year to find out if TripAdvisor can deliver meaningful sales gains in 2019.

Demitrios Kalogeropoulos owns shares of TripAdvisor. The Motley Fool owns shares of and recommends TripAdvisor. The Motley Fool has a disclosure policy.

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