Tripadvisor Inc (NASDAQ:TRIP) is the world’s largest travel site and operates in 30 countries, having trusted reviews from global travelers. It has gradually become the one stop portal for all travel needs and has developed a strong brand image. In this article, I will enumerate the reasons why I believe this stock is on the rise and will eventually outperform its peers.
Impressive Q1 results
In Q1 2013, Tripadvisor Inc (NASDAQ:TRIP) beat both top and bottom line estimates. EPS was higher than expectations at $0.39 million, which is 23% higher than the same period last year. Revenue and operating cash flow were also strong. This is despite the travel and vacation industry normally being a little stagnant in the first quarter of a year. Click-based advertising for Tripadvisor Inc (NASDAQ:TRIP) comprised 78% of the total revenue, at $180 million. The factors behind the growth of this stock are:-
1. One major revenue driver is the growth in Facebook Inc (NASDAQ:FB) usage with more than 33 million monthly users counting TripAdvisor as the most trusted travel app on the social networking site. Add to this the rapid international expansion taking place. TripAdvisor generates 60% of its revenue outside the U.S. with the Asia Pacific region being the fastest, registering a staggering 75% growth.
The company tries to make a mark in the local markets by incorporating local languages and content. Moreover, according to statistics, over 50% of Tripadvisor Inc (NASDAQ:TRIP) users search for hotels along with travel locations. The international hotel industry offers better growth opportunities than in the U.S. where it has become quite saturated. This is a plus point for TripAdvisor’s growth in international locations.
2. The mobile platform is another key growth driver for TripAdvisor. The number of downloads of the travel app is close to 36 million and the company has witnessed an increase of 300% in monthly unique mobile device visitors. The travel app popularity on both the tablet and smartphone is growing pretty fast. Tripadvisor Inc (NASDAQ:TRIP) is devoting more time and money to optimize the meta experience on both the channels. Moreover, the new Samsung Galaxy S4 is coming pre-loaded with the travel website’s app, making it one of the first of its kind. This means that TripAdvisor has an instant access to a huge market of Samsung.
Meta display — the next big thing
In Q4 2012, Tripadvisor Inc (NASDAQ:TRIP) launched the meta display feature in smartphones. This functionality helps integrate all the search query results on the main page. Hence, it is a more clean and user friendly interface, allowing users to check out all the travel and hotel listings along with the locations on a single page. Currently, this meta feature is used by 20% of the users and TripAdvisor is planning to launch it globally by the end of June. By doing this, it will lead to increased conversion rates and pricing gains, impacting revenue positively.