Gaining 20% This Year, Will Tripadvisor Stock Rally Further After Q1 Results?

+41.13%
Upside
18.10
Market
25.54
Trefis
TRIP: Tripadvisor logo
TRIP
Tripadvisor

Tripadvisor (NASDAQ: TRIP), an online travel company providing booking for hotel reservations, transportation, lodging, travel experiences, and restaurants, is scheduled to announce its fiscal first-quarter results on Wednesday, May 8. We expect Tripadvisor’s stock to likely see little to no movement with revenue and earnings matching estimates.  Liberty Tripadvisor Holdings (LTRPA) has stated its intention to engage in discussions regarding a potential acquisition, prompting the formation of a special committee to evaluate proposals resulting from these discussions. It should be noted that LTRPA owns 21.1% of Tripadvisors’ shares outstanding and TRIP’s stock price has gained traction since this announcement. That said, Tripadvisor stock has been struggling for years as its audiences have moved elsewhere and the demand for online advertising has been weak due to tough competition from Google. It is difficult to compare Tripadvisor’s current business with its previous business model because it has reorganized over the years. However, in 2019, the company’s Tripadvisor brand (representing 60% of its sales then) generated revenue of $939 million. By comparison, in 2023 the company’s Tripadvisor Core brand (~58% of sales now) generated a total revenue of $1,031 million – signaling only a small revenue growth during this period. In addition, Tripadvisor’s gross margins have always been consistently more than 90%. But still, despite such high margins, the company’s profits have been scarce and far between through the years, largely due to higher spending on sales and marketing.

TRIP stock has seen a decline of 15% from levels of $30 in early January 2021 to around $26 now, vs. an increase of about 35% for the S&P 500 over this roughly 3-year period. Notably, TRIP stock has underperformed the broader market in each of the last 3 years. Returns for the stock were -5% in 2021, -34% in 2022, and 20% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 24% in 2023 – indicating that TRIP underperformed the S&P in 2021, 2022, and 2023. In fact, consistently beating the S&P 500 – in good times and bad – has been difficult over recent years for individual stocks; for heavyweights in the Information Technology sector including MSFT, AAPL, and NVDA, and even for the megacap stars GOOG, TSLA, and AMZN.
In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride as evident in HQ Portfolio performance metrics. Given the current uncertain macroeconomic environment with high oil prices and elevated interest rates, could TRIP face a similar situation as it did in 2021, 2022,  and 2023 and underperform the S&P over the next 12 months – or will it see a recovery?

Our forecast indicates that Tripadvisor’s valuation is at $26 per share, which is in line with the current market price. Look at our interactive dashboard analysis on Tripadvisor Earnings Preview: What To Expect in Q1? for more details.

Relevant Articles
  1. Up 26% Already This Year, What Is Next For Tripadvisor Stock?
  2. Up 21% Since 2023, How Will Tripadvisor Stock Trend Post Q4 Results?
  3. Down 18% This Year, How Will Tripadvisor Stock Trend Following Q3 Results?
  4. What’s Next For Tripadvisor Stock?
  5. Will Tripadvisor Stock See Gains Post Q2?
  6. Tripadvisor’s Stock Down 10% This Year, What’s Next?

(1) Revenues expected to come in line with consensus estimates 

Trefis estimates Tripadvisor’s Q1 2024 revenues to be around $395 Mil, in line with the consensus estimate. The company’s Q4 revenues rose 10% y-o-y to $390 million. Its adjusted Q4 EBITDA of $84 million, or 22% of revenue, came in better than expected due to a favorable channel mix and disciplined marketing spending. Tripadvisor’s sales shot higher in fiscal 2023 to an all-time high value of $1.8 billion, reflecting a 20% annual growth. The company’s Viator segment allows third parties to list bookable experiences on its platform. It then collects the payment through travelers’ bookings, pays the experience organizer, and keeps a cut for itself in a much similar way to how Airbnb does business. Viator now contributes to 40% of total revenues and its revenues grew almost 50% y-o-y to $737 million in FY 2023.

For the full year 2024, we expect Tripadvisor revenues to rise 10% y-o-y to nearly $2 billion.

(2) EPS likely to match consensus estimates

Tripadvisor’s Q1 2024 earnings per share (EPS) is expected to come in at 2 cents as per Trefis analysis, matching the consensus estimate. Tripadvisor’s net income for the full year was $10 million, or $0.08 diluted EPS – down 42% year-over-year (y-o-y). The company spent aggressively on marketing and technology development, especially in the Viator and core Tripadvisor platforms.

(3) Stock price estimate matches the current market price

Going by our Tripadvisor’s Valuation, with an EPS estimate of around $1.07 and a P/E multiple of around 23.9x in fiscal 2024, this translates into a price of $26, which is in line with the current market price.

It is helpful to see how its peers stack up. TRIP Peers shows how Tripadvisor’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

Returns May 2024
MTD [1]
2024
YTD [1]
2017-24
Total [2]
 TRIP Return -2% 20% -44%
 S&P 500 Return 2% 8% 129%
 Trefis Reinforced Value Portfolio 2% 1% 621%

[1] Returns as of 5/6/2024
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market-Beating Portfolios

See all Trefis Price Estimates