After Banner Year, TripAdvisor Stock Begins Correction

Jacob Harper |

Online travel booking company TripAdvisor, Inc. (TRIP) has been one of the highest-flying internet stocks in its short existence. The company, which was spun off from Expedia Inc (EXPE) in late 2011, has exploded, as more deal seekers look to aggregator sites like TripAdvisor as opposed to pop-up window sites like Expedia and Priceline.com Inc. (PCLN) . The stock has shot up 83.33 percent since the beginning of the year.

A couple weeks after a positive second quarter 2013 earnings report, the stock hit a year high of $81.97 a share. Following that high, investors began expressing their doubts that the stock’s run was sustainable. Out of 20 analysts polled by NASDAQ, 14 held a “hold” rating or lower on the stock.

On Aug. 14, TripAdvisor investors got their first taste of truly bad news: TripAdvisor CEO Steve Kauffer admitted in a conference call that sales during the normally busy summer travel season had been bumpier than expected, and hinted that the Q3 sales numbers would be worse than expected. Kaufer said, "I don't generally provide updates in the quarter, but if I have to, the update this quarter is like I'm not seeing a lot of positive stuff."

Almost immediately, the company started experiencing a major correction, as the stock dropped nearly 8 percent. Volume was double normal, as investors scrambled in response.

TripAdvisor has been much-hyped in tech circles for being on the cutting edge of hotel and airline search. While Priceline and Expedia cling to the pop-up model, TripAdvisor aggregates real time prices on one page. Priceline and Expedia referrals make up for one half of TripAdvisor’s revenue.

But Priceline is getting in on the sea change to metasearch. In June, Priceline purchased metasearch software company Kayak for $1.8 billion in cash and stock. Priceline has nearly reached $1,000 a share following strong Q2 2013 earnings.

TripAdvisor is down 7.49 percent to hit $74.90 a share.

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Companies

Symbol Name Price Change % Volume
EXPE Expedia Inc. 123.55 -0.22 -0.18 1,753,338
PCLN The Priceline Group Inc. 1,527.04 22.22 1.48 389,907
TRIP TripAdvisor Inc. 47.60 -0.57 -1.18 2,724,765
ENDTF Canoe EIT Income Fund Unit 8.97 0.09 1.00 5,151

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