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TRIP Stock Tanks 17% as TripAdvisor Profits Stumble in Q3 2022

UTC by Bhushan Akolkar · 3 min read
TRIP Stock Tanks 17% as TripAdvisor Profits Stumble in Q3 2022
Photo: Depositphotos

The TRIP stock came under pressure as the company flagged a slowdown in revenue for Q4. for the ongoing quarter, TripAdvisor expects the revenue to rise in the low-single-digit range from 2019.

On Tuesday, November 8, shares of TripAdvisor (NASDAQ: TRIP) came crashing down amid its weak Q3 2022 revenue report. A day before the online travel giant reported that its quarterly profits have tumbled. Besides, it also flagged a slowdown in revenue for the fourth quarter.

TripAdvisor in Q3 2022

For the third quarter, TripAdvisor’s adjusted earnings surged by 75% year-over-year to $0.28 per share. However, it missed analysts’ estimates of $0.39 by a considerable margin.

The company’s top line remained strong with revenue at $459 million for the third quarter. This was 51% more than the revenue in the previous quarter. The top line surged amid strong demand for travel-related queries during the last quarter. The company reported an 8% growth in average monthly unique users on Tripadvisor-branded websites.

However, the company’s profitability was severely impacted by higher marketing expenses. US travel companies have been willing to cash on the post-pandemic boom in tourism. As a result, they have been spending heavily on marketing to get more people to book flights and accommodations on their websites and apps.

During the last quarter, TripAdvisor’s marketing and selling costs surged by a staggering 58% to $234 million. The company also added that its marketing spending would continue to remain high during the fourth quarter. TripAdvisor believes that its marketing efforts would yield results the next year in 2023.

Q4 Outlook by TripAdvisor

The US travel giant has shared the outlook for the fourth quarter adding that they expect the revenue to rise in the low-single-digit range from 2019. The company’s guidance for the fourth quarter comes from the belief that the travel demand will continue to remain strong despite the macro headwinds. During the earnings call on Monday, the company said:

“We are optimistic about the long-term opportunities in travel, despite a recovery path that is likely to remain uneven by month and by specific revenue line, and less reliably consistent relative to pre-pandemic”.

Last week, vacation rental company Airbnb Inc also announced the forecast for the holiday-quarter revenue. Airbnb said that the revenue could fall short of expectations amid a strong dollar that is putting pressure on its business. The company expects bookings to remain moderate.

The TRIP stock has a hold consensus from a majority of the brokerages. The average TRIP stock price target is $28.63 while implying a 20.29% upside potential. Before Tuesday’s price crash, the TRIP stock was outperforming peers like Expedia Group Inc (EXPE.O), Booking Holdings Inc (BKNG.O) and Airbnb Inc.

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