Tripadvisor Earnings: Weak Meta and Strong Experience and Dining Demand Continues; Shares Attractive

No-moat Tripadvisor's experiences and dining business remained stout, but its hotel metasearch platform continued to lag the hotel industry in the first quarter, causing shares to drop around 10%. We expect these trends to endure, driven by the company's lead in experiences and dining remaining in place due to relative high barriers to aggregating these fragmented markets and prudent investment, while lower metasearch barriers face ongoing competition from Google, and in the future Meta and Amazon. We plan to reduce our $27 fair value estimate by a high-single-digit percentage on higher marketing expense, which we see as required to maintain our sales forecast. In fact, marketing as a percent of sales was 59%, up from 54% last year, and we plan to model it at around 51% on average during the next 10 years versus about 50% prior. Still, we think investors are severely discounting the company's experiences and dining assets. We think renewed talk of a potential IPO for Viator could serve as a catalyst for shares, although we don't expect that to be on the table until financial market certainty improves.