Please ensure Javascript is enabled for purposes of website accessibility

Why TripAdvisor Stock Fell Today

By Evan Niu, CFA - Mar 11, 2020 at 12:54PM

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

Fears around the novel coronavirus outbreak continue to impact travel companies.

What happened

Shares of TripAdvisor (TRIP 3.76%) have fallen today, down by 5% as of 12:20 p.m. EDT, amid continued market volatility related to the coronavirus. Travel-related companies have, not surprisingly, been hit the hardest in recent weeks, as the outbreak threatens to crush demand for travel and transportation.

So what

It's been about a month since the travel tech company reported fourth-quarter earnings and discussed the potential impacts of the outbreak on the conference call with analysts. At the time, CEO Stephen Kaufer acknowledged that the company was seeing some "unexpected or new cancellation levels in Asia" before pointing out that TripAdvisor does not do much business in that part of the world. More than 80% of revenue last year came from the U.S. and the U.K., TripAdvisor's two largest geographical segments.

Woman wearing a mask walking through an airport with luggage.

Image source: Getty Images.

"We might see 1 point or 2 or low single digits impact, but at this point it's there," Kaufer added. "We're watching it closely. So it's not that material to us." However, that was a month ago, and much is changing as the disease continues to spread to other countries.

Now what

Management didn't provide much detail regarding whether TripAdvisor's guidance for 2020 incorporates the impacts of the outbreak. Adjusted EBITDA this year is expected to be roughly flat compared to 2019.

TripAdvisor warns in its 10-K:

As another example, our financial results may be negatively impacted by the 2019 Novel Coronavirus outbreak. ... The extent and duration of such impacts remain largely uncertain and dependent on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the coronavirus, the extent and effectiveness of containment actions taken and the impact of these and other factors on travel behavior.

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
$18.47 (3.76%) $0.67

*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
316%
 
S&P 500 Returns
112%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

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.