TripAdvisor stock continues its strong freefall and reached its lowest level on record, with its market capitalization falling from over $15 billion to $998 million today. This sell-off has accelerated this week as investors predict that Muse and other AI agents. So, will the stock continue falling or bounce back?
Why TripAdvisor stock is falling
TripAdvisor is one of the largest players in the travel industry. Its core product enables people to book hotels and experiences and read reviews. It also owns Viator, a company it acquired in 2014 in 2014 in a $200 million deal.
TripAdvisor’s stock has come under pressure in the past few years as it has confronted numerous challenges, including rising competition and slow growth.
Most recently, investors are concerned that its business will be disrupted by artificial intelligence tools, like Meta Platforms’ Muse. One can use Muse to find cheap and quality places and even book automatically. This also explains why Airbnb stockis in a freefall.
The company’s revenue growth has slowed substantially in the past few quarters as its bookings have tumbled. Its recent results showed that its revenue dropped by 7% to $441 million, with its hotels segment seeing the most weakness.
TripAdvisor’s profitability also continued waning. The experiences’ segment had an adjusted EBITDA of $30.8 million, down by 19% from a year earlier. Also, the hotels segment’s EBITDA fell by 23% to $45.6 million. This weakness pushed the management to slash workers during the quarter.
The management has also made some major moves to generate value, including selling TheFork to American Express in a $700 million. It is also focusing on growing its experiences business and implementing more AI tools.
Wall Street analysts believe that its revenue growth will remain under pressure as inflation rises and competition rises. The average estimate among analysts is that its third quarter revenue will come in at $453 million, down by 17.8% from the same period last year. For the fourth quarter, its revenue is expected to drop by 17% to $340 million.
These metrics explains why analysts are bearish about the company. Stephen Ju, a UBS analyst, has a target of $12, while B. Riley Securities has a target of $12.50. JPMorgan and Cantor Fitzgerald have an underweight rating. Also, investors have also taken a bearish outlook for the company, with the short interest rising to 25%.
TRIP stock technical analysis
The daily chart shows that the TRIP stock has crashed and is now hovering around near its all-time low. It has already plunged below the crucial support level of $8.96, its lowest level in March and May this year.
The stock has plunged below all moving average and the ultimate support level of the Murrey Math Lines tool. Therefore, the stock will likely drop further, potentially to the key support level of $5. A surge above the key resistance level of $8.96 will invalidate the bearish outlook.