Since it's the end of the year, I decided to look for companies that have had a tough 2014, but could see a turnaround sometime in 2015. Year to date, shares of TripAdvisor (TRIP) are down about 6%. In November, the shares were knocked down 30% after revenue growth slowed and expenses increased. If the company can catch a few breaks in 2015, I think the stock can go higher.
Last month, the stock was decimated when the company reported a slowdown in click-based advertising revenue. Trip Advisor reported that total third-quarter revenue rose 38.8% to $354 million, $0.12 worse than expected. Earnings were below consensus due to a larger-than-expected decline in click-based advertising. Revenue from click-based ads grew just 5% sequentially to $247 million. The sequential growth rate for click-based ads grew 15% in the second quarter, and 43% in the first quarter.
Management lowered guidance for next year and expects fiscal 2015 click-based revenue to grow in the low 20% range. Management also acknowledged that they had a difficult time monetizing the company's mobile user base. But it seems the company can fix that with better-designed mobile apps.
TripAdvisor is moving away from display and click-based ads and has begun to grow revenue from instant booking. Although booking revenue growth has been slower than expected, there is tremendous opportunity to capture the instant booking business. The company has 150,000 hotel properties on the site and just 10% of users have used hotel bookings.
TripAdvisor just bought European restaurant reservation site La Fourchette. TripAdvisor already has more than 200 million restaurant page views a month and La Fourchette has nearly 150 million restaurant reviews. When combined with TripAdvisor's traffic, restaurant reservation revenue should pick up.
With nearly 58 million registered users, TripAdvisor has a number of ways to beat consensus estimates next year. In May, the company acquired Vacation Home Rentals and Trip Bod, a travel tour company. Both of these acquisitions still haven't been fully monetized and represent possible upside to estimates next year.
With a few different ways to win, TripAdvisor could be a stock worth watching next year.