TripAdvisor: what does Starboard Value's arrival in the capital mean?

Published: 2025-07-03 10:36:32 ET TRIP

Published on 07/03/2025 at 10:36

By Eloi Suinot

Activist fund Starboard Value has announced that it has acquired a 9% stake in the travel group TripAdvisor. The announcement caused an immediate surge, a sign that investors are expecting positive changes. But what can we hope for from this arrival, for a stock that has been losing momentum over the past one, three, five, and ten years?

TripAdvisor's historic platform is in steady decline, facing competition from all sides. Conversely, two subsidiaries are doing well: The Fork (restaurant reservations) and Viator (activity reservations). These two entities posted double-digit growth in Q1 2025, while the main site declined by 8%. It's worth noting that, for the first time, TripAdvisor no longer accounts for the majority of the group's revenue.

In early 2024, the majority shareholder considered a sale, but this was eventually abandoned. The special committee ultimately concluded that "no transaction was in the best interests of the company and its shareholders at this time."

Starboard Value is known for targeting undervalued companies with potential for transformation. In its press release, the fund states that TripAdvisor "represents an attractive investment opportunity." Its method is well-established: acquiring a stake, engaging in dialogue with management, and proposing reorganization or strategic redeployment. Its clear objective is to maximize value for shareholders.

The fund generally invests in companies with governance that it believes could be improved, which have disappointing results, or whose stock's are undervalued. It has already worked with companies such as Campbell Soup, Hilton, Autodesk, and Kenvue.

In the case of TripAdvisor, it could notably support a refocusing on growing subsidiaries, to the detriment of the historic platform.

Another avenue to explore is data monetization. TripAdvisor has a wealth of information on travel habits and consumer reviews. This data could be monetized through AI or the sale of licenses.

A management shake-up cannot be ruled out. The stock lost 15% in the twelve months leading up to the announcement, a sign of latent investor discontent.

One cloud remains on the horizon: profitability. Viator and The Fork have very low margins, with EBITDA of $33m and $5m, respectively. Jefferies analysts have been warning for several quarters about the erosion of TripAdvisor's margins due to heightened competition (Google Travel, social media, AI). This symptom puts the group's net margin at 0.27%.

Starboard's arrival comes after a difficult start to the year for tourism, but in a climate that is now clearer. The fund certainly sees untapped value in the group. What is it? That is the challenge for the coming months.

Strategic changes are to be expected in the near future. The summer season is now underway and we can expect a confrontation between management and the expectations of the Starboard Value fund.

Eloi Suinot