TripAdvisor Shares Plunged More Than 18% Today, Here’s Why

TripAdvisor

As Airbnb continues to compete for vacation customers, online bookings have suffered tremendously. TripAdvisor, Inc. (NASDAQ:$TRIP) is no exception – the online travel firm saw its shares plunge Tuesday after warning investors about future results due to the increase in spending in response to growing competition.

TripAdvisor shares dropped more than 18%, which puts them on track for its worst day since November of last year.

It is not a total surprise to see TripAdvisor shares slipping today seeing as the Needham, Massachusetts-based company reported hotel revenue that missed Wall Street expectations on Monday. The company posted $312 million in revenue, while TheStreet (NASDAQ:$TST) was forecasting the company to bring in $326.2 million. Further, the company saw key metric growths like revenue per hotel shopper drop 11% year over year.

Michael Olson, an analyst at Piper Jaffray (NYSE:$PJC), echoed his neutral rating on the company but cut his price target, even after the company’s 15% decline year to date.

In a note to clients, Olson wrote, “The decline [in revenue] was attributed to advertising partners reducing spend on TripAdvisor, along with the company’s decision to ‘manage to greater efficiency on performance-based marketing channels. “We anticipate the trajectory of TripAdvisor Click & Transaction revenue growth will continue its downward run through 2017, as the company absorbs the negative effects of weaker spend from advertising partners and a growing mix of lower monetizing mobile users.”

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About the author: Caroline Harris is a third-year student at Capilano University in North Vancouver, Canada. Having already completed an Associates Degree in Psychology, Caroline is now finishing her Bachelor's degree in Communications. In preparation for working in the advertisement sector, Caroline is writing financial content and analysis. On a daily basis, Caroline works on articles regarding the following topics: finance, cryptocurrency, technology, and politics.