As 2018 draws to a close, the stock market has experienced big ups and downs, starting with the longest bull market in history in August-3450 days, and then the "bloody" inflection point in November. Morgan Stanley even said: "US stocks are already in a rolling bear market."
However, no matter how big the market is, there are always a few companies that can play it steady. AMD, the best-performing stock in the s & p 500, has risen 93% so far this year. Looking back on the best gainers, one company attracted particular attention-TripAdvisor, up 78% for the year before the start of trading on Dec. 14, far surpassing a group of technology companies.
(among S & P stocks, the best and worst performers before the start of trading on December 14, source: Bloomberg)
Why can this online travel company take off this year?
If you look back at the stock price movements since the company went public, TripAdvisor is not a Daniel stock. The company's share price peaked at $112.4 in 2014, compared with the current stock price of $57.71. The sharp rise in share prices this year stems from its strong second-and third-quarter results.
(share price chart of TripAdvisor since its listing, source: Futu Niuniu)
According to its financial report,The company's operating income is divided into hotel business income and non-hotel business income.Non-hotel business income includes advertising revenue such as restaurants, scenic spot tickets, etc. The income of hotel business mainly depends on the income of Booking, Expedia, Hotels and other institutions.
TripAdvisor's revenue growth has been good since 2018, and although its hotel business is still negative, its non-hotel business has maintained double-digit growth for a long time, alleviating the decline in its hotel business. And its CEO also said at the company's earnings meeting: "regardless of our performance in the hotel sector, our company's growth potential is huge." "
At the same time, the company's revenue structure continues to adjust, and the proportion of the company's non-hotel business continues to increase, from 20.9% in the first quarter of 2018 to 33.4% in the third quarter.
(source: financial report)
(source: financial report)
In terms of profit, since 2018, with the increase of non-hotel business income, the company's profitability has also improved, and EBITDA has maintained steady growth. And the market is generally optimistic about the growth of its non-hotel business.
(source: financial report)
From the trend of TripAdvisor's stock price, we can see that the company's rapid development period was in 2014, and after that, the stock price went down all the way due to increased competition in the tourism market, company scandals and other negative news. But now investors are more concerned about whether the stock price can return to its highest level with the continuous adjustment of the company's strategy.
Amazon.Com Inc of the tourism industry, the moat of "tourist community"
Although the general trend is that TripAdvisor is not a bull stock, its excellent fundamentals can not be ignored: TripAdvisor is the world's largest tourism website and the world's largest tourism community, with markets in 49 countries and regions around the world. The company's position for itself is to let travelers give full play to the potential of each trip, so that travelers can know more and play better.
(source: TripAdvisor's official website)
Founded in 2000, the company started as a simple guide to book review and aggregating other resources. Today, the average monthly UV (Unique Visitors, unique visitors) on the site has reached 455 million-about one in 16 people worldwide plans a trip by visiting TripAdvisor's website. The website contains 702 million comments on accommodation, air tickets, travel experience and restaurants, and 8 million hotels, air tickets, travel experience and restaurants to choose from.
Reviewing the development history of TripAdvisor, we will find that TripAdvisor is definitely not the founder of online tourism, and the essence of TripAdvisor is not an online travel website. Long before TripAdvisor was founded, there were other companies involved in this field, but today, among the online travel sites, only TripAdvisor can outperform the others.
According to the statistics of Alphabet Inc-CL C trend, the number of terms searched for "TripAdvisor" worldwide (excluding China) in the past five years is much higher than that of "Priceline", the founder of online travel C2B business model, and even "Expedia", the parent company of Zeng Jin.
(source: Google Trend)
Some analysts have commented: TripAdvisor is to travel what Alphabet Inc-CL C is to search, Amazon.Com Inc is to electronic mall, and Uber is like a taxi, it is in a monopoly position in the industry.The company's moat comes from the "tourism community" environment created by a large user group: users create high-quality content, high-quality content is also attracting more users, community formation.
(source: company website)
Based on a large number of users, the company's "business" has been formed, on the one hand, to provide online travel services to users; on the other hand, to charge "advertising fees" for hotels, restaurants, etc., and make money from advertising revenue, which has created a good momentum of development for a long time.。
At the beginning of TripAdvisor's founding, open consumer review was regarded as a risky behavior. When Amazon.Com Inc allowed users to comment in 1995, he was even ridiculed as a "retail suicide". But TripAdvisor's founder adhered to this idea and shifted users' attention from expert opinions to ordinary consumer comments, slowly forming a "community" environment and building a moat. More and more people begin to write down their travel experiences on the website, and more and more people begin to find travel strategies on the website.
When the company's business gradually expanded from hotels and restaurants, people also found that "one-stop" tourism service could be realized on TripAdvisor. When finding strategies, booking hotels and checking air tickets could be completed at the same time, users' stickiness increased, brand loyalty increased, and the moat strengthened.
In fact, TripAdvisor's business model is very simple, but with the first-mover advantage, the moat is very strong-no website can build a tourism community with such a large user base in a short period of time.
In order to maintain this "community", TripAdvisor even has hundreds of employees doing content review at the same time, 1/3 of whom also specialize in monitoring the "water army". Its senior media relations manager said: "in the past three years, we have shut down 60 companies that sell false reviews, but it is also clear that many have not been identified. "
Looking back at the travel websites on the market, we can see that they are mainly based on travel notes, such as hornet nest, or comments, such as Yelp, Dianping, or simply booking software, such as Booking and Airbnb. Although they also have a small amount of cross-business, they can also buy tickets, book hotels, and see hotel comments on Booking, but TripAdvisor is the only one.
Risks: the macro environment is in the doldrums, the hotel business is declining, and the problem of the water army is prominent.
Although the company has repeatedly stressed in its financial statements that the global tourism market has broad prospects and there is a lot of room for online travel market, it is an indisputable fact that the overall tourism industry is extremely vulnerable to the overall market. At present, under the uncertain events such as the trade war, Brexit and the Federal Reserve's interest rate hike, the global economy is in the doldrums, and it is not clear how the tourism industry will develop next year. It is not known whether TripAdvisor's financial report next year will be as bright as this year.
In addition, the decline in TripAdvisor's hotel business is indeed an indisputable fact, although the company sees it as a good sign that it is the result of their income structure adjustment. However, Booking, Expedia, Hotels and other institutions, which mainly rely on the company's hotel business income, have been greatly reducing their expenditure on online advertising and marketing. TripAdvisor's hotel business income is "cool" soon. Moreover, more and more people no longer book hotels directly through TripAdvisor. Alphabet Inc-CL C trend statistics show that compared with other hotel reservation websites, the entry of "TripAdvisor" is far lower than that of "Booking" in the past five years, or even worse than "Airbnb" after the second half of 2016.
(source: Google Trend)
At the same time, the company faces the same problem as other technology companies: the "water army".In order to maintain his "tourism community" moat, TripAdvisor paid special attention to content, but when TripAdvisor began to appear on the market, the water army industry had been developing in a blowout. On the one hand, users are still distinguishing whether the content is true or false, on the other hand, those users who give poor reviews are being harassed by merchants. Between 2015 and 2017, TripAdvisor users deleted more than 2000 comments because they could not be disturbed by merchants. What is even more exaggerated is that some users will also receive lawsuits from merchants. How to better improve the community environment and better retain users is also a big problem that owls have to face.
As for the owl's valuation, Bloomberg analysts have a target price of 58.77, and the current price is already above the target price. In addition, according to the rapid growth of stock prices this year and earnings in the first three quarters, TripAdvisor's PE value is more than 80 times. Deutsche Bank thinks it will increase its profit by 10-15% in 2019. Despite the high praise from investment banks, investors still need to be wary of its risks.
(source: Bloomberg)
(editor / Jiang Wenwen)