Ever since Trip Advisor rolled out their Instant Booking platform to become a one-stop shop for travel, their stocks have been suffering. Do we think it is all going downhill from here? Or do we think this is just a teething phase and its a good time to buy on the dip before it rebound? Let’s take the IDDA approach to find out!
1- Fundamental Points
Who the heck are they?
Needham, Massachusetts-based TripAdvisor (NASDAQ:TRIP) is one of the first websites I visit whenever I think of a travel destination. They use their in-depth travel related reviews to rate and rank popular travel destinations, hotels, and restaurants. Many travelers hold TripAdvisor’s rankings in high regard, and base their travel decisions on what they read.
There is also a nifty online forum discussion page where you can ask questions about a travel destination such as “Which is the best restaurant to visit in the North Pole?”, or “Are there mosquitoes in Iceland?”. There is a strong community spirit on Trip Advisor where seasoned travelers help out other fellow travelers.
They recently seemed like they have moved away from their ad-based model, and rolled out an instant booking service platform for booking hotels and flights directly on their website, making them a one-stop shop for travel research, reviews, and bookings. Because of this move, they are putting themselves in direct competition with the online travel agencies (OTA) sector.
Who are their competitors?
The leaders of the OTA sectors are Washington-based Expedia Inc (NASDAQ:EXPE) and Connecticut-based Priceline.com (NASDAQ:PCLN). They are participating in TripAdvisor’s Instant Booking platform (after much reluctance and hesitation), only because of TripAdvisor’s wide customer reach. This participation allows for a win-win relationship to develop. Talk about “Keep your friends close and your enemies closer.”!
Fun Fact: Expedia Inc (NASDAQ:EXPE) owns Hotels.com, Orbitz, Trivago, HomeAway, Egencia, Travelocity, Hotwire, Wotif Group, CarRentals.com, and Traveldoo. Priceline Group owns bookings.com, agoda.com, KAYAK, RentalCars, and OpenTable.
With the rise of technology and social media brings about a new wave of competitors—AirBNB. AirBNB is a community-based online marketplace. They have been disrupting the scene of not only online travel agencies, but hotels as well. Many online travel agencies and hotels view AirBNB as a threat and have been pressuring governments to include more rules around their business model.
What are they doing differently?
TripAdvisor has built a strong online community over the years. They have almost 400 million monthly unique visitors and their user reviews doubled in 2016 to 465 million. They are unlike Expedia and Priceline, where users only go to their websites to make travel bookings. Although TripAdvisor has a much larger customer base than Expedia and Priceline, many of their users use TripAdvisor only for travel research, then moving on to Expedia or Priceline to make their bookings.
TripAdvisor’s biggest hurdle is converting these travel researchers into actually making the booking on their website.
TripAdvisor has made this strategic investment into their company. We just have to wait it out to see it become a seamless one-stop shop for travelers. When users do finally accept the transition and change, getting in now and holding the stock will reap tremendous benefits.
What’s going on in their company structure?
TripAdvisor’s CEO and co-founder is 53 year-old Stephen Kaufer, and he is committed to seeing Instant Booking’s successful transition on TripAdvisor. He believes it is the right decision, and will see it through. His compensation in 2016 was $1,338,110.
There have been rumors through the great vine that TripAdvisor and Priceline may join forces.
This brings us to the second point of IDDA for the TripAdvisor stock analysis: Technicals.
2- Technical Points: TripAdvisor Stock Analysis
TripAdvisor spun off from Expedia in December 2011 to go public. The stock peaked in spring 2014 at $110 per share but has been on the downhill since. There is a strong resistance level around the 50% Fibonacci retracement level at 67.62. It ranged between 60-70 in 2016, and plummeted down towards the end of last year while the global transition of Instant Booking was ongoing. It is currently being supported around the 78% Fibonacci zone at $41.64.
3- Market Sentiment
On the daily time-frame, TripAdvisor appears to have formed a triple bottom around the 41.18 level, which is just below the 78% Fibonacci retracement. It seems like the TripAdvisor stock has bottomed out around there. If the price confirms or breaks above the neckline of the triple bottom, this could be our first indication of a reversal.
The stock price still remains below the Ichimoku cloud. The Kijun line seems to be crossing above the Tenkan line as of now. If it does, it will be another confirmation of a bullish reversal.
4. TripAdvisor Stock - Investing Strategy
As the 4th point of the IDDA, you must calculate your risk tolerance before deciding on which investing strategy is suitable for your portfolio.
Here are Invest Diva's calculations for important approximate levels, with regards to the TripAdvisor stock analysis.
Support LevelsTurning PointResistance Levels 31.4043.8451.3541.1846.6156.96
Good luck!
Cherie Koh