The situation continues to deteriorate for TripAdvisor’s stock. It fell to a record low of $8.82 on Thursday, extending a downward trend that started in 2014, when shares peaked at $98.80. Most notably, the current price is far below the $17.50 that a mystery buyer, speculated to be Apollo, had offered for the company.
TripAdvisor’s business is facing major headwinds
TripAdvisor, a company that has become a big name in the travel industry, continues to deteriorate, with its revenue and profits falling.
Its recent results showed that its revenue dropped by 7% in the June quarter to $441 million. This retreat was mostly because of its Hotels and Other segment whose revenue dropped by 21% to $163 million. Its Experiences business made over $278 million during the quarter.
Analysts predict that the weakness will continue in the foreseeable future. For example, the average estimate is that its third-quarter revenue will fall by 17.8% to $453 million. Its fourth-quarter revenue is expected to drop by 17% to $340 million, bringing the annual revenue to $1.58 billion, down by 16.2% on an annual basis.
In contrast, other top companies in the travel industry are doing relatively well despite the ongoing challenges. For example, Airbnb’s annual revenue is expected to grow by 15% this year to $14.16 billion, while Booking Holdings revenue will grow by 8.70% to $29 billion.
TripAdvisor website traffic has slumped
TripAdvisor’s weakness is partly because of the falling traction on its platform, which is evidenced by the falling traffic. SimilarWeb data shows that its website had 100 million visitors last month, down by 3.27% from the previous month. Competition is also rising, including from tools like OpenAI and Anthropic. All of these have led to a significant weakness in bookings.
TripAdvisor’s management is working to address these concerns. For one, they recently decided to sell TheFork to American Express in a $700 million deal. Its goal is to use the funds to improve its balance sheet and improve its capital allocation.
Most notably, the management said that it was considering additional opportunities to catalyze shareholder value. One of these strategies would be a sale, which would be the most ideal situation for now. The issue, however, is that the management will not find a better offer than the one it rejected.
Analysts have turned bearish on the company. UBS Group analysts slashed the target from $15 to $12, while B. Riley Financial slashed from $13 to $12. Cantor Fitzgerald cut from $10 to $9.
TripAdvisor stock technical analysis
TRIP stock chart | Source: TradingView
The weekly chart shows that the TRIP stock has been in a strong sell-off in the past few years. It has now plunged below the important support level of $8.82, its lowest level in March and May this year.
The stock has plunged below all moving averages, a sign that bears remain in control. It also fell below the strong, pivot, reverse level of the Murrey Math Lines tool. Therefore, the stock will likely continue falling, potentially to the Ultimate Support level of $6.25.
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