Tripadvisor's stock could see record plunge as potential buyout plans dropped

By Tomi Kilgore

Quarterly profit beats expectations, as strength in Viator and TheFork sales offset Tripadvisor brand weakness

Shares of Tripadvisor Inc. were down significantly in Wednesday premarket trades after the online travel-booking company said it decided pursuing a potential sale would not be in the best interest of the company or its shareholders.

The company also reported a first-quarter profit that unexpectedly rose, beating expectations by a wide margin, boosted by its move into higher-growth experiences offerings.

The stock (TRIP) plunged 31.5% in premarket trading, which put it on track to open at a five-month low. It was also headed for a record one-day selloff. The current record was a 23.2% drop on Nov. 7, 2017.

On Feb. 13, the stock had soared 13.8%, after the company said it formed a "special committee" to evaluate any proposals for a potential "transaction" and other strategic alternatives.

On Wednesday, the special committee decided that no transaction would be in the best interests of the company and its shareholders.

"The special committee will continue to evaluate proposed alternatives as appropriate," Tripadvisor said in a statement. "There can be no assurance that any transaction will result, and the company does not expect to provide further updates unless it has something definitive to share."

Separately, the company reported a net loss for the quarter to March 31 that narrowed to $59 million, or 43 cents a share, from $73 million, or 52 cents a share, in the same period a year ago.

Excluding nonrecurring items, such as a $42 million income-tax expense resulting from a settlement with the Internal Revenue Service, adjusted earnings per share rose to 12 cents from 5 cents. That beat the FactSet EPS consensus, which called for a decline to 4 cents.

Revenue was down 6.5% to $395 million, compared with the FactSet consensus of $395.1 million.

Among the company's businesses, Tripadvisor brand revenue fell 1.6% to $240 million, below the FactSet consensus of $242.8 million. Viator revenue jumped 22.6% to $141 million to beat Wall Street expectations of $139.1 million and TheFork revenue climbed 17.1% to $41 million to top expectations of $39.4 million.

"We are pleased with our first quarter results, which provide a solid start to the fiscal year, and were driven by the continued diversification of our portfolio into higher growth experiences offerings," said Chief Executive Matt Goldberg.

Within Tripadvisor brand revenue, hotel revenue fell 5% to $159 million, media and advertising revenue increased 10% to $33 million and experiences and dining revenue grew 9% to $36 million.

Through Tuesday, the company's stock has rallied 18.4% year to date, while the S&P 500 index SPX has gained 8.8%.

-Tomi Kilgore

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05-08-24 0915ET

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