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Positioned at the intersection of three ailing industries virtually decimated by the pandemic – travel, hotels, and restaurants – TripAdvisor (TRIP) hasn’t had, well, much to review in 2020. The market hasn’t been any more forgiving, and TRIP shares are down 33% year-to-date.
With all three pillars on which Trip’s business rests at a standstill during the viral outbreak, the company has taken measures to remain afloat.
It has reduced the headcount by 23%, while an additional 22% of employees have been furloughed. Costs have been slashed by a further $45-65 million, pay and hours reduced by roughly 20% and the company has taken on a $700 million loan. Fuller estimates TRIP will see out the year with more than $550 million of cash.
Looking at the near term, the figures provide no comfort. The company has indicted that in the latter half of March, revenue dropped by over 90%. Hardly a surprise, with restaurant reservations and hotel bookings hovering slightly above zero.
Fuller expects 2Q revenue to be down by 90-95%. Following “aggressive cost cuts,” and a halt on marketing, the analyst believes TRIP will report an EBITDA loss of between $85-90 million for the quarter.
There’s more uncertainty further down the line, as apart from competitive concerns, Fuller crosses out the likelihood of a v-shaped recovery.
Fuller opined, “It is hard to say what recovery might look like. We default to a U-shape given the economic fall-out, second wave fears and distancing restrictions impacting flights, accommodations and events... As relates to metasearch and TRIP in particular, we see OTA advertisers de-emphasizing the channel and GOOG positioning as a disintermediation threat. We also note that a pivot towards experiences and dining holds promise, but we are not convinced in TRIP's ability to execute.”
That’s BTIG’s view, how about the rest of the Street’s? 6 buys, 2 Holds, and 1 Sell coalesce to a Moderate Buy consensus rating. Based on the $21.48 average price target, the analysts expect TRIP shares to decline by a modest 3%. (See TRIP stock-price forecast on TipRanks)
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