Does Tripadvisor Look Expensive At $23?

After a 20% growth over the last six months, at the current price of around $23 per share, we believe Tripadvisor’s stock (NASDAQ: TRIP), an online travel company providing booking for hotel reservations, transportation, lodging, and travel experiences, could see modest declines. TRIP stock has increased from around $19 to $23 in the last six months, outperforming the broader indices, with the S&P staying flat over the same period. The company’s financial results for both 2020 and 2021 were significantly impacted due to the decrease in travel demand related to Covid-19. However, TRIP experienced a recovery in travel demand and strong growth in gross bookings from pre-Covid levels during the first nine months of 2022.

It is worth mentioning that a 58% year-over-year (y-o-y) rise in selling and marketing costs and an increase in headcount to support growth weighed on the Q3 profitability. For the fourth quarter, management expects a moderate step down of Tripadvisor core revenue as a percent of 2019 from Q3. This step down is not related to a change in its revenue trends, but to a particularly strong August in Q3 2022 and unique items in Q4 2019 that create a tougher revenue comparison. Please note that in 2019, television advertising for the brand Tripadvisor and other expenses were considerably higher in Q3 than in Q4, creating a sequentially harder comparison from an adjusted EBITDA margin perspective as well, in addition to the impact of the revenue step-down. The company also anticipates a significant foreign currency impact in the fourth quarter, amounting to about a $34 million headwind. That said, while consolidated revenue is expected to increase by a low single-digit percentage from 2019, a modest slowdown from Q3 2022 is also expected.

We have revised Tripadvisor’s valuation to $21 per share, based on a $0.67 expected EPS and a 30.9x P/E multiple for the fiscal year 2022 – almost 8% lower than the current market price. We forecast Tripadvisor’s Revenues to be $1.5 billion for the fiscal year 2022, up 64% y-o-y.

It is also helpful to see how its peers stack up. Check out how Tripadvisor’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

[1] Month-to-date and year-to-date as of 1/23/2023
[2] Cumulative total returns since the end of 2016