Tripadvisor’s Stock Down 30%, What’s Next?

Tripadvisor stock (NASDAQ: TRIP) has declined from around $21 at the beginning of 2024 to $15 now – a 30% fall over a period when the benchmark S&P index grew 28%. In comparison, TRIP’s peer Booking Holdings (NASDAQ: BKNG) has seen its stock rise 44% during the same period. See What’s Next For Booking Holdings’ Stock After An Upbeat Q4? So, what’s happening here?

Tripadvisor’s 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 Alphabet (Google) (NASDAQ: GOOG). We believe that Tripadvisor could see pressures in the short term with only limited growth potential in the medium to long term.

Image by Edeltravel_ from Pixabay

In Q4, Tripadvisor’s revenue was up 5% year-over-year (y-o-y) at $411 million and its non-GAAP earnings per share came in at $0.30 – down 21% y-o-y. In addition, the company’s GAAP earnings per share came in at 1 cent compared to 22 cents in the year-ago quarter. The company spent aggressively on marketing and technology development – especially in the Viator and core Tripadvisor platforms. The company’s strategic focus on the experiences category paid off, as the Viator and TheFork segments reported significant revenue growth of 16% and 23%, respectively. However, the Brand Tripadvisor segment saw a 6% decline in revenue, highlighting challenges in its traditional business model. Its adjusted Q4 EBITDA of $73 million (down 13% y-o-y), or 18% of revenue, came in better than expected due to a favorable channel mix and disciplined marketing spending. Viator has become a significant contributor to the company’s revenue, accounting for 46% of the total. As a platform, Viator enables third-party providers to list bookable experiences, facilitating transactions between travelers and experienced organizers. The company’s business model is analogous to that of Airbnb, wherein Viator collects payments from travelers, remits the respective amounts to the experience organizers, and retains a commission fee.

It isn’t easy to compare Tripadvisor’s current business with its previous business model because it has undergone reorganizations 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 2024 the company’s Tripadvisor Core brand (~52% of sales) generated a total revenue of $949 million – signaling almost flat revenue growth during this period. In the recent Q4, the core brand contributed 50% to total revenues. A sizeable slowdown in core revenue share has dragged the company’s stock lower this year. Also, while Tripadvisor’s gross margins have always been consistently more than 90%, the company’s bottom line remains underwhelming largely due to increasing sales and marketing spending.

• Looking ahead, Tripadvisor projects a consolidated revenue growth of 5-7% y-o-y for 2025, with an adjusted EBITDA margin of 16-18% y-o-y. The company expects continued strong performance in the Viator segment, with mid-to-high teens booking volume growth, while Brand Tripadvisor is anticipated to experience a low single-digit revenue decline. TheFork is expected to achieve low double-digit revenue growth. We have revised Tripadvisor’s valuation to $16 per share, based on a $13.51 expected revenue per share and a 1.2x P/S multiple for the fiscal year 2025 – slightly higher than the current market price. We forecast Tripadvisor’s Revenues to be about $1.9 billion for the fiscal year 2024, up 6% y-o-y.