Added TripAdvisor spotlight

Investment Opportunity?

Brand value? TripAdvisor is the world’s largest travel site with 400m+ unique monthly visitors. Also own 23 other relatively less known websites.

Use of new technology to disrupt? Aggregated platform of user reviews generates increasing ongoing traffic.

Sympathy/spillover effect on valuation? Nothing obvious at the current time.

Trading Opportunity?

Potential sector or index selling? Nothing obvious.

Under/over-reaction to news?


Revenue

trip revenue.PNG

trip revenue detail.PNG

Strategy

  • 15% of user reviews are hotel-related but hotels are 75% of revenue
  • Monetize remaining content by diversify into attraction revenue
  • Continue to enhance user experience while using the product

trip content breakdown.PNG

trip strategy.PNG

Approximate Valuation

  • Fair value approx $45 – 50
  • For hotel business which generates cash, look at cash flows
    • Approx worth $40 (see below)
  • For non-hotel which is in growth phase look at P/S multiple or PEG ratio
    • 17% EBITDA margin so its prob worth 1.5 – 3x sales
    • $3 of non-hotel revenue per share
    • Approx worth $4.50 – $9 per share

Hotel business valuation (attribute current operating cash flows to hotel business)

trip hotel valuation.PNG

Watching

  • Growth in non-hotel business, without this TripAdvisor could lose brand value
  • Maintenance of hotel business, because current valuation heavily depends on this

 

 

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