Tripadvisor Declines 8.8% on Disappointing Q3 Results

Online travel company Tripadvisor, Inc. (TRIP) has reported weaker-than-expected results for the third quarter ended September 30, 2021, as the company’s revenue and earnings failed to surpass the consensus estimate.

Following the earnings, shares of the company declined 8.8% to close at $31.79 in Monday’s extended trade.

Revenue & Earnings

Tripadvisor reported quarterly revenues of $303 million, a significant growth from the previous year’s figure of $151 million. The figure, however, failed to surpass the consensus estimate of $307.83 million.

Revenues from the Hotels, Media & Platform segment and Experiences & Dining segment contributed to the overall growth in revenues with each growing 115% from the prior year.

The company’s quarterly earnings per share (EPS) of $0.16 compares favorably with the previous year’s loss of $0.17 per share. The figure, however, missed the consensus estimate of $0.24 per share.

Other Operating Metrics

The company’s average monthly unique users on its branded websites during the quarter rose to about 76% of 2019’s comparable period, compared to approximately 70% and 55% of 2019’s comparable periods during the second and first quarters of 2021, respectively, the company said in a release.

Management Commentary

The CEO of Tripadvisor, Steve Kaufer, said, “We are pleased to see a continued pick-up in consumer travel demand as borders open and vaccinations are more widely administered. In addition to macro tailwinds, we believe that our customer experience, expansive reach, product offerings, and position in the market will drive sustained growth and strong customer loyalty. We are very excited about the progress we are making in our key initiatives with a focus on the long-term, even as we remain cautiously optimistic about near-term travel trends.”

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Price Target

Recently, Barclays analyst Mario Lu downgraded the stock to a Sell from Hold and lowered the price target from $49 to $30, which implies downside potential of 14% from current levels.

According to the analyst, the prevalence of the delta variant hurts the prospects of the company with a shift in consumer behaviour towards alternative accommodations and a more flexible work schedule.

Moreover, the analyst believes that with social media, online travel agencies and organic search, the use of metasearch is gradually losing its relevance, which does not bode well for the company.

The Wall Street community is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 5 Buys, 3 Holds and 1 Sell. The average Tripadvisor price target of $43.13 implies that the stock has upside potential of 23.7% from current levels. Shares have gained about 43.4% over the past year.

TipRanks Website Traffic

TipRanks’ Website Traffic Tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Tripadvisor’s performance this quarter.

According to the tool, the Tripadvisor website recorded a 2.70% monthly rise in global visits in September. Further, year-to-date, website traffic rose 13.56%.

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