Why TripAdvisor Stock Gained 39% in May

What happened

TripAdvisor (NASDAQ: TRIP) shares shot up 39% last month, compared to a 2% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

^SPX data by YCharts.

The increase put shares back in positive territory over the past year, but the stock remains far below the high it set in mid-2014.

So what

Investors were ecstatic to see evidence that the travel specialist’s rebound plan is gaining steam. Sure, sales inched higher by a meager 2%, which indicates continued struggles in TripAdvisor’s core hotel booking division. But profits improved by 20% thanks to more efficient marketing investments and a booming attractions niche that jumped 36% and cut its operating losses in half.

Now what

Image source: Getty Images.

The firming profit picture gave CEO Steve Kaufer and his team confidence as they look out to the rest of fiscal 2018. “We are tracking well to our financial objectives,” he said in a press release.

As a result, TripAdvisor raised its top- and bottom-line forecasts and now expect modest growth on both metrics. These aren’t robust projections, given the quickly expanding industry. But they do suggest that the company has turned a corner on its earnings trends. And, with profitability on firmer footing, management can turn its focus back toward converting its huge travel community into increasing market share.

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Demitrios Kalogeropoulos owns shares of TripAdvisor. The Motley Fool owns shares of and recommends TripAdvisor. The Motley Fool has a disclosure policy.

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