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Why TripAdvisor Stock Fell Today

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

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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.

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