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.
Potential sector or index selling? Nothing obvious.
Under/over-reaction to news?
- Increased senior executive redundancy payouts in the event of a takeover signalling potential corporate action on the horizon
- Introduces upside tail risk for the stock
- 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
- 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)
- Growth in non-hotel business, without this TripAdvisor could lose brand value
- Maintenance of hotel business, because current valuation heavily depends on this