Is TripAdvisor Inc (NASDAQ:TRIP) On a Trip Downhill?

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By Chris Hillman on July 25, 2014 Technology & Software

On Thursday, stocks rose up and pushed the Standard & Poor’s 500 numbers into a record territory again. Keep in mind that the index has gone into the record breaking territory 2 times in a row over a period of one week. A number of earnings reports were released during the week and the traders had to digest a lot of economic data.

Many expected TripAdvisor to triple their earnings according to their lofty valuations. Since TripAdvisor had a bad earnings quarter, they did not meet expectations and many investors bailed. Though revenue came close to $321.7 million, investors were worried by the huge marketing costs: 50% of total revenue. Yet TripAdvisor is in it for the long term and wants to create a business that has long life time value. They are the #1 brand, and this small trip up is just temporary and they could still be on track to gain long term value on their initial marketing spends. They still increased sales by 31% from last year. Their major competitors include Yelp and Priceline.com and thus competition is fierce.

Coming to the jobless claims, the numbers were the lowest since 2006 and the data was better than expected. The data for May was revised and the figures sank in even further. The sales’ of new-homes for June touched the lowest numbers over a period of 3 months.

Talking about the Standard & Poor’s 500 numbers, the points jumped up by 0.2 percent and reached to 1,990.54 with an addition of 3.5 points. Dow Average increased by 0.1 percent and the numbers reached to 17,105.61 with an addition of 19 points. As far as the NASDAQ Composite is concerned, it gained 8 points and reached to 4,481.64 points.

The chief market strategist at CMC Market, a financial derivative dealer company, said that the market was on a high this week. Colin Cieszynski further commented that since the benchmarks are reaching all time high figures, they are at a risk of corrections.

The earnings data and remarkable corporate news have kept the market fueled up till now, but the market is about to approach its weak seasons and hence, it is pertinent that the good news keeps on coming to the market.

Coming to the earnings sector, the shares of Facebook Inc (NASDAQ:FB) rose by 5.6 percent after the better than expected earnings report surpassed all the estimates and predictions. Moreover, stocks of Ford Motor Company (NYSE:F) jumped by 1.5 percent when the earnings of the company exceeded the expectations.

On the flip side, the shares of General Motors Company (NYSE:GM) sank by 2.8 percent when the company’s earnings reports failed to beat the estimates. Moreover, TripAdvisor Inc (NASDAQ:TRIP) stocks fell down by 11 percent and Angie’s List Inc (NASDAQ:ANGI) shares slipped by 22 percent. The shares of Caterpillar Inc. (NYSE:CAT) saw a decrease of 3.3 percent following the news that the company has missed the estimates of the second quarter on account of a decline in its equipment sales.

Coming to the economic data, according to the government reports, the sales of new houses declined last month. The figures, during a period of 3 months, have seen their slowest pace in June, all around the country. Talking about the jobless claims, this year, the government has received the lowest numbers of requests for the jobless benefits over a period of 8 years, which means that the industry is rising and the employers are not letting go of their workers.

Moving to the Asian Stocks, the China Shanghai Composite rose by 1.2 percent whereas the European stocks gained a high, over a period of week. However, the Nikkei 225 index fell down. The price of dollar (DXY) remained steady whereas the gold prices (GCQ4) and Crude oil (CLU4) edged lower.