Why Tripadvisor Stock Is on the Map Today
Starboard Value just disclosed a 9% stake in Tripadvisor.
The stock costs 38 times earnings, but profits are growing quickly, and so is free cash flow.
Starboard scored a quick gain on Tripadvisor -- but the stock has even more room to rise.
Tripadvisor (NASDAQ: TRIP) stock galloped ahead 18% through 11:05 a.m. ET Thursday after activist investor Starboard Value disclosed that it has taken a 9% stake in the travel advisor.
Calling the company "undervalued" (at the time it bought the shares -- we'll have to see if it remains undervalued now that it's up 17%), and "an attractive investment opportunity," Starboard plans to meet with management to discuss ways to improve the stock's price even further.
Although I have to say, a 17% one-day prop is already quite an improvement!
Momentum investing
Tripadvisor's an excellent prospect for the kind of stock that can be moved suddenly by a surprise headline. It was valued at less than $1.8 billion before today's announcement, so it only cost Starboard $160 million to build its 9% stake.
After the announcement, the stock has already gained more value than Starboard put into it.
Is Tripadvisor a buy?
Priced north of $2 billion today, Tripadvisor represents a potentially compelling value proposition. The company's debt load is modest -- only about $105 million. And while the stock costs nearly 38 times trailing earnings, analysts forecast Tripadvisor will also earn nearly $105 million next year, with even stronger free cash flow. Even valued just on the generally accepted accounting principles (GAAP) profit, the stock's forward P/E ratio is only about 20. And next year's earnings are expected to grow 40% compared to this year's.
Paying 20 times earnings for a 40% grower? Yeah, that sounds like a pretty "attractive investment opportunity" to me, too.
Should you invest $1,000 in Tripadvisor right now?
Before you buy stock in Tripadvisor, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tripadvisor wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $692,914!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $963,866!*
Now, it's worth noting Stock Advisor 's total average return is1,050% — a market-crushing outperformance compared to179%for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of June 30, 2025
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