Tripadvisor Earnings: Quarter In-Line, but Shares Down on Weak Guidance, News of No Planned Asset Sale

Tripadvisor shares dropped around 30% during May 8 trading because of management's decision not to sell its assets—a possibility announced in February—and reduced 2024 guidance, precipitated from its recent search-algorithm changes. We plan to reduce our $26 per share fair value estimate to around $20 per share, to account for lower 2024 sales and EBITDA, as well as incremental marketing expenses in the next several years. Moreover, we have long held that higher-barrier online platforms of narrow-moat peers Booking, Expedia, and Airbnb put no-moat Tripadvisor’s metasearch network at a disadvantage. For these reasons, we would require more of a material discount to our fair value before recommending the shares.