What happened
Actions of TripAdvisor (NASDAQ: TRAVEL) were heading again today as the travel advice specialist was struck again by fears of coronaviruses. This morning, California declared a state of emergency after reporting its first death from the coronavirus, and Italy announced yesterday that it would close all of its schools until at least March 15 as part of an effort to contain the spread of the virus in what has been one of the countries most affected by the disease. Both are popular travel destinations.
TripAdvisor was one of many travel titles to plummet today as the industry continues to respond to concerns about the virus. TripAdvisor’s stock fell 8.5% at 11:41 a.m. EST, while the S&P 500 was 2.1% at that time.
Image source: Getty Images.
So what
TripAdvisor earns most of its money by selling advertisements to travel-related businesses such as hotels, restaurants, and tourist activities. It is not surprising that this type of business is likely to be hit hard if the overall travel economy declines. Hotels, for example, are less likely to spend money on advertising if fewer people are looking to book rooms.
As further evidence that a travel recession is underway, United airlines said yesterday it would cut 10% if its domestic flights and 20% of its international flights next month due to lower demand caused by the coronavirus, and it expects a similar reduction in May. JetBlue also said it would reduce capacity by 5% in the short term.
Now what
TripAdvisor was already struggling before the coronavirus hit, as it made little progress with its booking platform and was challenged by Google, which has made efforts to penetrate the travel industry in recent years. In its February results report, which predated the spread of the coronavirus epidemic beyond Asia, the company called for adjusted EBITDA growth to be at least stable for 2020, and sees the revenues continue to decrease in its hotel segment.
TripAdvisor stocks hit a historic low today, but the research-based company is solidly profitable and is starting to look cheap with its P / E ratio at just 12 now. However, given its lack of growth and the challenges of the coronavirus, this seems to be a fair assessment.
10 actions we like better than TripAdvisor
When investment geniuses David and Tom Gardner have a tip, it can be beneficial to listen. After all, the newsletter they’ve run for over a decade, Motley Fool Equity Advisor, tripled the market. *
David and Tom have just revealed what they believe are the top ten stocks investors can buy right now … and TripAdvisor was not one of them! That’s right – they think these 10 stocks are even better purchases.
See the 10 actions
* Returns from the portfolio advisor as of December 1, 2019
Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Jeremy Bowman has no positions on any of the titles mentioned. The Motley Fool owns shares and recommends Alphabet (A shares) and TripAdvisor. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
What happened
Actions of TripAdvisor (NASDAQ: TRAVEL) were heading again today as the travel advice specialist was struck again by fears of coronaviruses. This morning, California declared a state of emergency after reporting its first death from the coronavirus, and Italy announced yesterday that it would close all of its schools until at least March 15 as part of an effort to contain the spread of the virus in what has been one of the countries most affected by the disease. Both are popular travel destinations.
TripAdvisor was one of many travel titles to plummet today as the industry continues to respond to concerns about the virus. TripAdvisor’s stock fell 8.5% at 11:41 a.m. EST, while the S&P 500 was 2.1% at that time.
Image source: Getty Images.
So what
TripAdvisor earns most of its money by selling advertisements to travel-related businesses such as hotels, restaurants, and tourist activities. It is not surprising that this type of business is likely to be hit hard if the overall travel economy declines. Hotels, for example, are less likely to spend money on advertising if fewer people are looking to book rooms.
As further evidence that a travel recession is underway, United airlines said yesterday it would cut 10% if its domestic flights and 20% of its international flights next month due to lower demand caused by the coronavirus, and it expects a similar reduction in May. JetBlue also said it would reduce capacity by 5% in the short term.
Now what
TripAdvisor was already struggling before the coronavirus hit, as it made little progress with its booking platform and was challenged by Google, which has made efforts to penetrate the travel industry in recent years. In its February results report, which predated the spread of the coronavirus epidemic beyond Asia, the company called for adjusted EBITDA growth to be at least stable for 2020, and sees the revenues continue to decrease in its hotel segment.
TripAdvisor stocks hit a historic low today, but the research-based company is solidly profitable and is starting to look cheap with its P / E ratio at just 12 now. However, given its lack of growth and the challenges of the coronavirus, this seems to be a fair assessment.
10 actions we like better than TripAdvisor
When investment geniuses David and Tom Gardner have a tip, it can be beneficial to listen. After all, the newsletter they’ve run for over a decade, Motley Fool Equity Advisor, tripled the market. *
David and Tom have just revealed what they believe are the top ten stocks investors can buy right now … and TripAdvisor was not one of them! That’s right – they think these 10 stocks are even better purchases.
See the 10 actions
* Returns from the portfolio advisor as of December 1, 2019
Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Jeremy Bowman has no positions on any of the titles mentioned. The Motley Fool owns shares and recommends Alphabet (A shares) and TripAdvisor. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
