Tripadvisor shares rise on TheFork sale to American Express
Tripadvisor stock surged after selling its TheFork restaurant booking unit to American Express for a surprisingly high price, a move that will leave the online travel group with a strong cash position to fund its turnaround.
Tripadvisor sold its TheFork restaurant reservation business to American Express, sending its shares up 12.41% over the past month. The stock closed at $14.40 on July 13, valuing the online travel company at $1.68 billion. The sale price exceeded the market's dampened expectations for the asset.
Longleaf Partners Small-Cap Fund, which held the stock as a notable contributor in the second quarter, detailed the strategic implications in its recent investor letter. "The price was well above depressed market expectations and closer to our opinion of fair value," the fund wrote. Longleaf noted that finalizing the transaction will shift Tripadvisor into a strong net cash position, providing leverage for future strategic moves.
The divestiture simplifies the company's narrative around its shifting business mix. "No matter what happens strategically, Tripadvisor can grow its own FCF per share more than the market expects as its growing Viator business crosses over its shrinking Tripadvisor business," the fund stated. First-quarter results already showed early signs of this margin expansion, with adjusted EBITDA reaching $22 million and beating expectations despite a 4% year-over-year revenue decline to $382 million.
Institutional investors had been trimming exposure prior to the deal announcement. The number of hedge fund portfolios holding Tripadvisor fell to 35 at the end of the first quarter, down from 43 in the previous quarter. Even with the recent monthly gain, the stock remains down 21.05% over the past 52 weeks.
The stock's trajectory contrasts with the broader small-cap universe, which rallied aggressively in the second quarter. The Russell 2000 Index gained 21.49% in the period, while the Russell 2000 Value Index rose 17.19%, driven largely by a market preference for speculative technology and industrial names. That environment punished value-oriented strategies like Longleaf's, which returned -2.47% for the quarter by prioritizing free cash flow growth over market momentum.
