Tripadvisor (NASDAQ: TRIP), an online travel company providing booking for hotel reservations, transportation, lodging, travel experiences, and restaurants, is scheduled to announce its fiscal third-quarter results on Tuesday, November 7. We expect Tripadvisor’s stock to likely trade higher due to revenue and earnings beating consensus estimates marginally. TRIP experienced a recovery in travel demand and strong growth in gross bookings from pre-Covid levels in 2022. However, the company’s rising costs have been impacting the company’s profitability as also seen in the fiscal first half of 2023. However, Tripadvisor’s Viator segment (the world’s largest online marketplace for tours, activities, and attractions) appears to be growing rapidly and is now making up a significant portion of total revenue. Additionally, the company appears to have ample liquidity with $1.1 billion in cash on the balance sheet, and about $345 million and $500 million in long-term debt maturities in 2026 and 2028, respectively.
TRIP stock has suffered a sharp decline of 50% from levels of $30 in early January 2021 to around $15 now, vs. an increase of about 15% 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 -18% in 2023. In comparison, returns for the S&P 500 have been 27% in 2021, -19% in 2022, and 13% 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 AAPL, MSFT, and NVDA, and even for the megacap stars GOOG, TSLA, and AMZN. In contrast, the Trefis High Quality 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?
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