Tripadvisor Stock To Trade Higher Post Q2 Results?

Tripadvisor (NASDAQ: TRIP), an online travel company providing booking for hotel reservations, transportation, lodging, travel experiences, and restaurants, is scheduled to announce its fiscal second-quarter results on Thursday, August 5. We expect Tripadvisor’s stock to likely trade higher post Q2 results with both revenues and earnings beating consensus estimates. The company’s business grew modestly in the first quarter of 2021, as it benefited from the pent-up travel demand in countries where large populations have been vaccinated. The U.S. economy, in particular, is expected to see a travel rebound as most of the pandemic restrictions are easing (mostly during Q2) and 49.7% of the U.S. population is fully vaccinated. That said, air travel and vacation trends likely won’t fully recover until the Covid-19 threat has passed, but vaccination has led consumers back to planning leisure travel. However, the recent surges in new Covid cases of the Delta variant may change that going forward.

Our forecast indicates that Tripadvisor’s valuation is at $43 per share, which is 16% higher than the current market price of $37. Look at our interactive dashboard analysis on Tripadvisor Pre-Earnings: What To Expect in Q2? for more details.

(1) Revenues expected to come ahead of consensus estimates

Trefis estimates Tripadvisor’s Q2 2021 revenues to be around $192 Mil, 2% above the consensus estimate. The company’s revenues were up 6% sequentially from $116 million in Q4 2020 to $123 million in Q1 2021. However, TRIP’s revenues declined 56% from year-ago quarter levels in Q1 and also stood at about 33% of 2019’s comparable period. It is also worth mentioning that Tripadvisor’s monthly users on its website increased slightly each month of Q1 2021 – reaching 53%, 56%, and 58% of 2019’s comparable periods respectively through January, February, and March.

Tripadvisor has been looking at a recurring revenue stream and has launched its new travel subscription (only in the U.S.) that will cost $99 per year in June 2021. To give some perspective, Tripadvisor already has more than 100 million users, which is currently a free service. In addition, it also saw around 400 million unique monthly active users pre-Covid. Subscription fees have been popular with companies as a way to build up loyalty and grow business. Tripadvisor’s new service includes discounts on many tickets, tours, and attractions, and personalized travel advice as well as discounted stays at more than 100,000 hotels around the world. The company expects the service to save members an average of $350 per stay.

For the full year 2021, we expect Tripadvisor revenues to rise 44% y-o-y to $868 million.

(2) EPS likely to beat consensus estimates

Tripadvisor’s Q2 2021 earnings per share (EPS) is expected to come in at a loss of 9 cents as per Trefis analysis, marginally better than the consensus estimate of -11 cents. While the company has a strong balance sheet to safeguard it from the current downturn (a cash balance of $674 million and another $1 billion in liquidity), reducing its outstanding debt of $830 million will mean relying heavily on the company’s post-pandemic recovery. 

(3) Stock price estimate higher than the current market price

Going by our Tripadvisor’s Valuation, with a revenue per share (RPS) estimate of around $6.48 and a P/S multiple of around 6.6x in fiscal 2021, this translates into a price of $43, which is 16% higher than the current market price of around $37.

It is helpful to see how its peers stack up. Check out Tripadvisor Stock Comparison With Peers to see how Tripadvisor compares against peers on metrics that matter.

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