It's always disturbing to see your stocks fall when the market is up. Yet that's exactly what shareholders in Lyft (LYFT -1.65%) and Tripadvisor (TRIP 0.34%) are seeing on Tuesday. Even with the Nasdaq Composite (^IXIC -0.64%) posting big gains of nearly 1.5% as of noon ET, the two mobility and travel stocks are both down double-digit percentages.
The news wasn't equally bad across the travel industry, with several key stocks actually contributing to the market's gains. Therefore, it's worth looking more closely at Lyft and Tripadvisor to see why they're missing out on the stock market's healthy gains.
Losing its Lyft
Shares of Lyft fell by more than 20% in early afternoon trading on Tuesday. The ride-hailing service reported third-quarter financial results that included some encouraging figures but also raised concerns about its long-term competitive position.
Lyft's quarterly results showed the same trends that shareholders have seen for a long time. Lyft did extremely well in bulking up its sales, with revenue hitting $1.05 billion and reaching an all-time high. Yet even with top-line growth of 22% year over year, Lyft wasn't able to deliver on the profit line, with adjusted net income falling 21% from year-ago levels.
More concerning, though, were numbers that suggested that Lyft might be losing some of its competitive edge to rival Uber Technologies (UBER -0.07%). Lyft reported 20.3 million active riders during the quarter, but that was up less than 8% from where it had been 12 months earlier. Meanwhile, Uber posted a user-count growth rate well above 20%. Lyft is also still behind where it was before the COVID-19 pandemic started on several key metrics.
Lyft expects fourth-quarter sales growth to slow to around 18% to 20%, and that's not the direction in which investors want to see the business moving. If Uber can take away market share from Lyft, it could begin a domino effect that will be tough for Lyft to survive.
Tripadvisor misses the boat
Elsewhere, shares of Tripadvisor were down almost 18%. The travel-review specialist reported third-quarter financial results that failed to inspire its shareholders, particularly in light of much better performance from other companies in its market niche.
There was actually quite a bit to like in Tripadvisor's financial report. Revenue jumped more than 50% year over year to $459 million. Net income moved higher from just $1 million in the third quarter of 2021 to $25 million in the most recent quarter, and adjusted pre-tax operating earnings also showed significant gains. Revenue moved above 2019 pre-pandemic levels for the first time.
Tripadvisor highlighted the importance of the Viator experience brand, which has blossomed in the past three years, seeing revenue rise by nearly 80% since 2019. Booking of tours, attractions, and other activities has particularly jumped now that North American travelers are starting to go to international destinations, once again. The company also pointed to its branded-hotel offerings as still relevant, even in the current marketplace.
Yet Tripadvisor warned that it sees a slowdown coming in the fourth quarter of 2022, with total revenue remaining only slightly above 2019 levels. Moreover, because of its emphasis on lower-margin business, Tripadvisor sees pre-tax operating margin falling to around 10%.
Even with revenue back at pre-COVID-19 levels, Tripadvisor stock is close to where it traded in the opening months of the pandemic. That doesn't bode well, especially given that online travel providers elsewhere in the industry are faring relatively better.
