TripAdvisor's Fight for Survival: Can Activist Pressure Unlock Value?

In the travel tech sector, few companies have faced as much scrutiny over the past decade as TripAdvisor (TRIP). Once a powerhouse of user reviews and travel planning, its stock has plummeted 80% since 2015, a decline exacerbated by post-pandemic shifts toward direct bookings and the rise of AI-driven platforms like Google Travel. Now, activist investor Starboard Value holds a 9% stake—acquired in late 2024—and is pushing management to slash costs, monetize assets, and refocus on high-growth subsidiaries like Viator. The question is: Can this turnaround strategy offset the drag of TripAdvisor's declining core business, or is the stock's undervalued multiple a trap?

The Activist Playbook: Cost Cuts and Asset Rationalization

Starboard's 9% stake, valued at $160 million, has already triggered a 17% stock surge. The firm's demands align with its historical playbook: slash underperforming divisions, prioritize high-margin subsidiaries, and force governance reforms. At TripAdvisor, this means:
1. Cost Discipline: Streamlining non-core operations, including office consolidations and back-office functions, to free up capital. Starboard is targeting $100 million in annual savings.
2. Asset Reprioritization: Shifting focus to subsidiaries like Viator (experiences bookings, 13% CAGR) and The Fork (European dining reservations, 12% revenue growth). The firm may push to spin off or sell non-core assets, unlocking standalone value.
3. Data Monetization: Leveraging TripAdvisor's 600 million annual users to create AI-driven insights for advertisers—a strategy that could boost ad revenue by 20%.

The merger with Liberty TripAdvisor Holdings in mid-2024, which eliminated dual-class shares, has already addressed governance concerns. But Starboard's next moves—likely by mid-2025—could include demands for board seats or leadership changes.

Viator's Growth vs. Core Decline: A High-Stakes Balancing Act

Viator, acquired in 2016, is the crown jewel. Its 22% revenue growth in 2024 and expansion into corporate travel bookings (a $50 billion market) offer a path to higher margins. Yet, Viator's $18 million EBITDA loss in Q1 2025 underscores execution risks. Meanwhile, TripAdvisor's core business—the review platform that once drove its success—continues to crumble. Brand TripAdvisor revenue dropped 6% in Q4 2024, as travelers increasingly rely on Google or Airbnb for bookings.

The chart shows TRIP lagging peers by 30–40%, reflecting skepticism about its ability to monetize Viator's potential.

The Undervalued Multiple: A Bargain or a Mirage?

TripAdvisor trades at a forward P/E of 7.9x, far below Expedia's 14.1x and Booking Holdings' 18.5x. Analysts argue this discount could narrow if margins improve to 16–18% (from 11% in Q1) and the company executes asset sales. A conservative multiple re-rating to 12x, paired with $1.5 billion in EBITDA by 2026, could push the stock to $55–60—a 50% upside from current levels.

But the risks are stark. Competitors like Google and Meta are encroaching on TripAdvisor's review dominance. Even if Viator succeeds, the core's decline could offset gains. And Starboard's push for cost cuts risks alienating users—imagine a pared-down TripAdvisor with fewer reviews, leading to higher cancellations.

Why “Sell the Spike” Now?

Investors should heed this advice: Take profits when the stock surges on positive news. Consider this scenario:
- Catalyst: Q2 2025 earnings show margin improvements or Viator's bookings stabilize.
- Reaction: TRIP rallies 20–30% as Starboard's demands gain traction.
- Risk: The rally could fizzle if core revenue declines accelerate or Viator's losses widen.

The “spike” is your exit. The stock's upside hinges on execution—a high bar given TripAdvisor's history of missing targets. Meanwhile, the downside is severe: A failure to cut costs or sell assets could leave TRIP trading below its $12.00 52-week low.

The Bottom Line: A High-Risk Gamble

TripAdvisor is a “high-reward, high-risk” play for aggressive investors with a 2–3 year horizon. The stock's undervalued status and Starboard's track record make it compelling, but the execution hurdles are formidable. For most, “Sell the Spike” is prudent—take profits on any near-term rally and wait for clearer evidence of margin expansion and asset sales. If you bet on TRIP, keep allocations small (2–3% of a portfolio) and set a stop-loss near $12.00. The path to $60 is possible, but the journey is fraught with potholes.

The graph shows margins stagnant at 10–12%, underscoring the uphill battle for improvement.

In the end, Starboard's activism has reignited TripAdvisor's turnaround. But survival will require more than just cutting costs—it demands a vision for how to compete in an era where reviews are commoditized and experiences are king. For now, the jury remains out.