Why TripAdvisor's Shares Dropped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of TripAdvisor fell 10% in early trading, after the company released earnings.
So what: The fourth quarter wasn't bad, with revenue up 23%, to $169.4 million, and earnings per share up 44%, to $0.23, both ahead of estimates. The problem is that management expects marketing costs to push higher in 2013, putting pressure on profits.
Now what: The company did show strong growth, so it isn't a reason for wholesale panic today. The challenge is that the stock is priced for perfection at 24 times forward earnings estimates. I'm not yet a buyer today, but if you are long the stock, I wouldn't jump ship just yet.
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The article Why TripAdvisor's Shares Dropped originally appeared on Fool.com.Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends TripAdvisor. The Motley Fool owns shares of TripAdvisor. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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