TripAdvisor (TRIP) falling 23% on soft outlook is an 'overreaction', says Bernstein

November 8, 2022 8:36 AM EST
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Price: $27.32 +1.19%

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TripAdvisor (NASDAQ: TRIP) stock is trading well over 20% lower in pre-open after the company reported its third-quarter results and offered weak guidance.

TripAdvisor posted a Q3 EPS of $0.28, easily missing the analyst estimate of $0.38. Revenue for the quarter came in at $459 million, beating the consensus estimate of $443.84 million. The travel company generated a free cash flow of $46 million to crush the analyst estimate that was calling for an outflow of $103 million.

For its fourth quarter, TRIP expects its revenue to be up low-single digit from 2019 and to show a “modest slowdown” from the previous quarter.

“Consolidated adjusted EBITDA margin to step down sequentially to close to 10% of revenue, a result of the seasonal step down, a mix shift towards our lower margin growth revenue lines, and the increased investment in Viator,” the company further stated.

Bernstein analyst Richard Clarke said TRIP delivered a “strong quarter,” which was offset by a soft outlook due to a higher-than-expected Viator investment. While he says the after-hours move in TripAdvisor shares is “a bit of an overreaction”, the results clearly show “the honeymoon period is clearly over.”

By Senad Karaahmetovic

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