Tripadvisor has shown significant progress with the recent announcement of the sale of its TheFork business to American Express, which exceeded market expectations and aligns with our fair value assessment. This strategic move positions Tripadvisor to strengthen its net cash position and explore further strategic options. Additionally, the growth of its Viator business is expected to enhance free cash flow per share, countering the decline in its traditional Tripadvisor business. Overall, we believe Tripadvisor is on a positive trajectory, supported by its improved board and strategic actions.

Tripadvisor was a detractor for the quarter, with disappointing results and a lack of board urgency. The legacy Tripadvisor business has been worse than initially anticipated, declining from ~20% of our value to closer to 10%. Despite this, we believe the company is now acting on important factors to realize value per share. There are various strategic options available, and we are optimistic about how the year will develop.

Tripadvisor, Inc. operates three online platforms that enhance travel planning, generating significant revenue. Despite its legacy business facing challenges, the company is undervalued at around 7x EBITDA compared to peers in the low to mid-teens. The recent buyback of Liberty Media's controlling position and the collapse of the dual class structure have improved governance. With Viator and TheFork growing rapidly, Tripadvisor is expected to return to growth, and Starboard's involvement suggests potential for value creation. The company also holds valuable data for AI applications, enhancing its growth prospects.

TripAdvisor performed well in the quarter for two main reasons. First, the company reported another solid set of results with growth at the Viator and TheFork businesses outpacing the more mature TripAdvisor segment. The company also engaged in more accretive share repurchases. The stock price was also helped by activist investor Starboard filing a 13D, signaling that there are multiple paths to value realization.

TripAdvisor was down in the first quarter despite a solid earnings report, but it was one of the few stocks I bought at close to bottom. The stock spiked in the first week of Q3 as activist firm Starboard Value bought up a bunch of shares and filed about its position, owning 9% of the company. TripAdvisor has turned away several takeover offers and recently cleaned up its ownership structure. Its Viator business is strong enough to carry the business as a whole and push the stock higher, and the pressure to consider takeover offers may work in our favor.

TripAdvisor has shown resilience despite a downturn, with a solid earnings report that led to a price increase. The involvement of activist firm Starboard Value, which acquired 9% of the company, adds pressure for potential takeover offers, which could benefit shareholders. The Viator business is performing well enough to support the overall company, indicating a strong underlying value. The recent cleanup of its ownership structure further positions TripAdvisor favorably in the market.

TripAdvisor reported earnings around the same time as Vimeo and faced a similar market reaction. Both companies have a unit or strategy that is growing fast—Viator for TripAdvisor—but also a declining legacy business that is hurting overall sales growth. The company plans to grow in 2025 and 2026, which requires investment. While travel spend may decrease, travel is a secular, long-term theme, and TripAdvisor should do okay even if there is less cross-border travel into/out of the U.S.