The popular travel portal's board has given preliminary approval to a plan that would split the company into two distinct entities.
Expedia will spin off TripAdvisor -- consisting of the namesake travel reviews website and 18 other ad-based websites -- to its shareholders. The Expedia that remains will consist of Expedia.com, Hotwire, Hotels.com, its stake in China's eLong
It's a smart move.
The market has never given Expedia enough credit for its popular non-booking websites. This is an area with a lot of promise to anyone that has seen travel deals publishers Travelzoo's
Expedia's booking sites will also benefit. Expedia has always traded at a discount to market darling priceline.com
There's a reason for the disparity. Expedia and Orbitz Worldwide
We still don't have the terms of the split or the prorated financials, but the sum of Expedia's two parts should be greater than the whole right now. Expedia's multiples are unlikely to drop too much lower than where they are now. Tack on a healthy market premium to TripAdvisor and its 40 million unique monthly visitors, and it's easy to see why the stock is ascending nicely today.
Would you rather own Expedia or TripAdvisor after the split? Share your thoughts in the comment box below.
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Longtime Fool contributor Rick Munarriz has been leaning on travel websites since the 1990s. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.