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TripAdvisor Inc TRIP

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

TripAdvisor’s Demand Recovery Starting to Gain Steam, While Its Plus Product Remains a Key Focus

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Demand on TripAdvisor’s network (source of its narrow moat) is improving, but at a slower rate than seen at narrow-moat companies Booking and Expedia. To illustrate, total sales improved to 39% of 2019 levels in March, up from 26% and 33% in January and February, respectively, with its first quarter reaching 33% of prepandemic levels versus 35% last quarter. This compares with Expedia and Booking’s first-quarter bookings improving to 52% and 47% of 2019’s mark, respectively, up from 33% and 35% in the prior quarter. Encouragingly, demand appears to be picking up, as the firm’s U.S. auction sales are currently over 90% of 2019 levels, up from nearly 80% and 67% in April and March, respectively. But this still trails other travel operators, where U.S. summer month bookings are above 2019 levels. Although we may lower TripAdvisor’s 2021 revenue toward 60% of 2019 levels versus low-60% in our existing model, we still see a full travel recovery by 2023. As a result, we don’t plan a material change to our $30.50 fair value estimate, leaving shares overvalued.

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Company Profile

Business Description

TripAdvisor is the world’s leading travel metasearch company. The website offers 887 million reviews and information on 7.9 million accommodations, restaurants, experiences, airlines, and cruises. In 2020, 60% of revenue came from the company's hotel, media and platform segment, which includes hotel revenue generated through advertising on its metasearch platform as well as commissions received on its Instant Booking platform. Experiences and dining represented 31% of revenue with the remainder consisting of flight, rental, and nonbranded TripAdvisor sales.

Contact
400 1st Avenue
Needham, MA, 02494
T +1 781 800-5000
Sector Consumer Cyclical
Industry Travel Services
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 2,579

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