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Why TripAdvisor Stock Fell Today

By Evan Niu, CFA - Apr 21, 2020 at 1:16PM

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Analysts cut estimates for the travel platform as advertisers reduce spending.

What happened

Shares of TripAdvisor (TRIP 3.76%) have fallen today, down by 5% as of 12:50 p.m. EDT, after several Wall Street analysts cut their price targets on the stock. The COVID-19 pandemic continues to hurt all travel-related companies.

So what

Credit Suisse reiterated its neutral rating on TripAdvisor shares, and analyst Stephen Ju lowered his price target from $37 to $28. With global travel demand being obliterated by the novel coronavirus, advertisers are also pulling back on ad spending. Credit Suisse has cut its estimates accordingly. The bulk of TripAdvisor's revenue comes from click-based advertising on its branded sites. The analyst also points to ongoing uncertainty: Last month, TripAdvisor withdrew its 2020 outlook due to "increased impacts" of COVID-19.

"Coronavirus Travel Restrictions" on a barrier at an airport

Image source: Getty Images.

UBS also reiterated a neutral rating while cutting its price target from $32 to $19. That change echoes Citigroup, which yesterday also maintained a neutral rating and reduced its valuation estimate from $25 to $19.

Now what

The public health crisis continues to disrupt broad swaths of the global economy, which now faces the prospect of a recession. TripAdvisor is confident that the travel industry will rebound, but it's still impossible to quantify the financial fallout.

"While the COVID-19 outbreak's full impacts are still to be determined, the travel and tourism industry has recovered from past disruptions," CEO Steve Kaufer said last month. "At Tripadvisor, we have successfully navigated these disruptions, and we will continue to operate prudently through this challenging period."

Earlier this month, TripAdvisor launched a global program to help diners and travelers and support local communities through the crisis.

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