By Senad Karaahmetovic
TripAdvisor (NASDAQ:TRIP) stock is trading well over 20% lower in pre-open after the company reported its third quarter results and offered weak guidance.
TripAdvisor posted a Q3 EPS of $0.28, easily missing the analyst estimate of $0.38. Revenue for the quarter came in at $459 million, beating the consensus estimate of $443.84 million. The travel company generated a free cash flow of $46 million to crush the analyst estimate that was calling for an outflow of $103 million.
For its fourth quarter, TRIP expects its revenue to be up low-single digit from 2019 and to show a "modest slowdown" from the previous quarter.
"Consolidated adjusted EBITDA margin to step down sequentially to close to 10% of revenue, a result of the seasonal step down, a mix shift towards our lower margin growth revenue lines, and the increased investment in Viator," the company further stated.
Bernstein analysts said TRIP delivered a "strong quarter," which was offset by a soft outlook due to a higher-than-expected Viator investment. While they say the after-hours move in TripAdvisor shares is "a bit of an overreaction," the results clearly show "the honeymoon period is clearly over."