Tripadvisor Soars 17% After Starboard Value Snaps Up 9% Stake

• Tripadvisor (TRIP) shares surged 17% to $17.55 after activist investor Starboard Value acquired a 9% stake, owning approximately 10.6 million shares, citing the stock’s undervaluation.
• Starboard plans to engage with Tripadvisor’s management and board to explore value-creation strategies, including potential changes to capitalization, board structure, or business combinations.
• Despite a post-2020 recovery, Tripadvisor’s stock has declined due to weaker core brand revenue, though subsidiaries Viator and TheFork have shown growth, amid reports of rejected takeover offers.

Tripadvisor (TRIP), a leading travel review platform, has seen its stock surge more than 17% to $17.55 in Thursday trading, driven by activist investor Starboard Value’s acquisition of a 9% stake, equivalent to approximately 10.6 million shares. Starboard’s regulatory filing highlights its view that Tripadvisor’s stock is undervalued, presenting a compelling investment opportunity. The activist investor said it plans to engage with Tripadvisor’s management and board to explore strategies for value creation, which could include changes to capitalization, ownership structure, board composition, potential business combinations, or operational improvements.

The travel industry, where Tripadvisor operates, has faced significant challenges in recent years, notably the sharp decline in travel and tourism during the COVID-19 pandemic in 2020, which caused Tripadvisor’s shares to plummet. While the stock experienced a recovery in 2021, it has since trended downward as revenue from the core Tripadvisor brand weakened, despite growth in its subsidiaries, Viator and TheFork. This uneven performance has likely contributed to the company’s perceived undervaluation, making it an attractive target for activist investors like Starboard, who specialize in unlocking value in underperforming companies.

Starboard’s involvement signals potential strategic shifts for Tripadvisor, which has reportedly rejected multiple takeover offers in the past year, as noted by The Wall Street Journal. The activist’s focus on operational and financial enhancements could push Tripadvisor to optimize its portfolio, possibly by prioritizing high-growth subsidiaries like Viator, a tour and activities booking platform, or TheFork, a restaurant reservation service. Alternatively, Starboard’s suggestions for business combinations or divestitures could reshape the company’s structure to better align with market demands.

The 17% stock price rally to $17.55 reflects investor confidence in Starboard’s track record of driving change in portfolio companies. However, Tripadvisor faces a competitive landscape, with evolving consumer preferences and digital platforms vying for market share in travel and hospitality. Starboard’s 9% stake and proactive engagement may catalyze a turnaround, but the success of any proposed changes will depend on Tripadvisor’s ability to adapt its business model to a post-pandemic travel market while leveraging its brand and data assets to regain momentum.

WallStreetPit does not provide investment advice. All rights reserved.

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