Tripadvisor (NASDAQ: TRIP) had an eventful week, starting with a surprising announcement on Monday that caught many investors by surprise. The company revealed that it was forming a special committee to evaluate potential buyout proposals, including those stemming from discussions initiated by its majority owner, Liberty TripAdvisor Holdings (OTCMKTS: LTRPA). This news led to a spike in Tripadvisor’s stock price on Tuesday.
On Thursday morning, Tripadvisor released its fourth-quarter earnings results, surpassing estimates and further boosting its share price in morning trading. Since the previous Friday’s close, Tripadvisor’s stock price has climbed by 24%, reaching around $27 per share as of Thursday morning.
The announcement on Monday followed a filing from Liberty TripAdvisor Holdings on Feb. 9, indicating its intention to explore potential transactions involving both Liberty TripAdvisor and Tripadvisor. The filing also mentioned Tripadvisor forming a special committee to engage in discussions about a potential transaction. If such a transaction were to occur, both Tripadvisor and Liberty TripAdvisor would cease to be publicly traded companies.
During the fourth-quarter earnings call on Thursday, Tripadvisor CEO Matt Goldberg refrained from providing further updates on the potential transaction unless there were definitive developments to share. Despite the uncertainty surrounding the situation, Tripadvisor’s financial performance for the fourth quarter exceeded expectations, with revenue increasing by 10% year over year to $390 million and net income reaching $32 million, or 22 cents per share.
For the full year, Tripadvisor reported a revenue increase of 20% to $1.8 billion, marking an all-time high. However, net income for the full year was $10 million, or 8 cents per share, down from $20 million the previous year.
Goldberg emphasized Tripadvisor’s focus on growth and diversification through its multi-year plan, despite the formation of the special committee and the evaluation of potential offers. While he provided insights into the company’s priorities and projections for 2024 during the earnings call, no official guidance or outlook was given.
Looking ahead, Tripadvisor anticipates a healthy travel market in 2024, with the first quarter likely to pose the most significant challenges compared to the previous year. Revenue stability is expected in Tripadvisor’s Brand arm, with slightly lower growth projected for its Viator and The Fork segments. Nonetheless, all three businesses are expected to be profitable this year.
Investors await further updates, including Liberty TripAdvisor’s quarterly Q&A conference call on Feb. 16, for additional insights into the situation.