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Why TripAdvisor Shares Were Rising Again Today

By Rich Duprey – May 27, 2020 at 12:13PM

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Everyone seems to be celebrating the reopening of the economy.

What happened

Shares of TripAdvisor (TRIP 3.40%) jumped over 4% at the stock market's open on Wednesday, joining the rest of the market's continued euphoria over the reopening of the economy.

So what

Travel and hospitality businesses have been among the hardest hit by the COVID-19 pandemic, but markets in the U.S. and around the globe are now coming out of the coronavirus-induced downturn.

Transportation Security Administration (TSA) data shows the number of travelers going through airport checkpoints rose to 262,734 for the week ended May 23, more than any other week since March 28.

Couple looking at a map

Image source: Getty Images.

Now what

TripAdvisor CEO Steve Kaufer has called the first two months of the pandemic the company's "darkest days" as it laid off hundreds of employees and cut pay, with bookings plummeting due to stay-at-home orders.

The industry is still not out of the woods, however. Disney, for example, isn't opening its parks until mid-July, and airlines are still walking a bankruptcy tightrope. That may explain why TripAdvisor's gains eased as the day progressed.

Yet the travel site still has a commanding position in the industry, having built up hundreds of millions of destination reviews over the years, and traffic can be expected to resume as the economy rebounds.

TripAdvisor had a big 16% gain on Tuesday, so maintaining that kind of momentum would be difficult under the best of circumstances, but investors ought to expect improving sentiment.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends TripAdvisor and Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short July 2020 $115 calls on Walt Disney. The Motley Fool has a disclosure policy.

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