The long-term logic of focusing on the experiences business remains unchanged, but macro and search traffic headwinds prompted a target price cut

Overview

This report reviews Tripadvisor's second-quarter results, the proposed sale of TheFork, and the latest operating guidance. The experiences business and hotels and other business within continuing operations were generally close to expectations, but the experiences business encountered declining search traffic, unusual weather, rising cancellation rates, and weak U.S.-to-Europe travel demand in June and July. Goldman Sachs believes the company's long-term direction of reshaping its asset portfolio around bookable experiences platforms such as Viator remains attractive, but near-term revenue and margin expectations need to be reduced significantly.

Core views

Over the long term, Tripadvisor is shifting its revenue mix toward faster-growing bookable experiences platforms with stronger market positions, while improving profitability and shareholder returns through cost optimization, scale effects, and healthy free cash flow. In the short term, changes in the search ecosystem, the shift from free traffic to paid marketing, weak macro demand, and weather impacts will continue to weigh on booking growth and margins. The sale of TheFork can unlock cash and simplify the business portfolio, but it cannot immediately eliminate traffic and demand pressure in the core business.

Analysis framework

The report combines actual second-quarter results with Goldman Sachs and consensus expectations for segment comparisons, assesses the impact of the TheFork sale on the business mix and capital allocation, and systematically lowers 2026 to 2028 forecasts based on management commentary. The target price is derived by equally weighting enterprise value multiple and modified discounted cash flow methodologies.

Methodology notes

• Relative valuationEnterprise value to GAAP EBITDA multiple method

  Applies an 8.0x enterprise value to GAAP EBITDA multiple to next twelve months plus one year forecasts.

  The multiple remains unchanged and is combined with modified discounted cash flow valuation at equal weights to determine the 12-month target price.

• Cash flow valuationModified discounted cash flow method

  Applies a 14.0x enterprise value multiple to free cash flow after stock-based compensation over the next twelve months plus four years, discounted back three years at a 12% discount rate.

  The multiple used was raised from 12.0x to 14.0x, reflecting Goldman Sachs' increased confidence in the company's long-term free cash flow generation ability; the discount rate is based on the capital asset pricing model, including a 3% risk-free rate, an average beta of about 1.3, and a 7% equity risk premium.

• Multi-factor analysisGoldman Sachs factor profile

  Compares the company with the covered market and industry peers by percentile across four dimensions: growth, financial returns, valuation multiples, and composite score.

  The growth dimension references forward revenue, EBITDA, and earnings per share growth; financial returns reference forward return on capital metrics; the valuation dimension references P/E, enterprise value multiples, and free cash flow multiples.

• M&A probability assessmentGoldman Sachs M&A rating framework

  Combines qualitative and quantitative factors to classify the probability of a potential acquisition into levels 1 to 3.

  Tripadvisor's M&A rating is 3, corresponding to a low acquisition probability of 0% to 15%, so an M&A premium is not included in the target price.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• TRIP.US

  The main covered company in the report, with a Buy rating maintained and target price lowered.

  Strengths

  Viator has a strong position in the experiences market and has become Google Gemini's first travel experiences partner; the sale of TheFork can improve business focus, while cost control, free cash flow, and potential shareholder returns provide medium- to long-term support.

  Weaknesses

  Experiences business growth is relatively sensitive to search traffic, cross-border travel demand, and weather; hotels and other business still faces structural declines in search traffic, and the shift from free traffic to paid marketing will also depress margins.

  Comparison

  Compared with hotels and other business, the experiences business is the main growth engine but has weaker near-term profit performance; hotels and other business has stronger profitability and better cost control, but revenue faces a deeper structural decline.

  Risks

  Key risks include intensified competition among travel platforms, generative AI reshaping traffic entry points, rising customer acquisition costs, weak macro and travel demand, slower-than-expected penetration of the online experiences market, and weaker-than-expected execution of the TheFork transaction and capital allocation.

Key data

• 12-month target price$14.00The previous target price was $16.00.
• Current share price$10.78As of the close on August 7, 2026.
• Target upside29.9%Calculated based on the target price and current share price.
• Proposed sale price of TheFork$700mnThe transaction consideration is cash, with expected net proceeds of about $680mn.
• Second-quarter revenue$442mnExperiences business revenue was $279mn, and hotels and other business revenue was $163mn.
• Second-quarter adjusted EBITDA$76mnBelow Goldman Sachs' estimate of $82mn and consensus estimate of $84mn; hotels and other business was better than expected, while the experiences business was below expectations.
• Second-quarter GAAP EPS$0.19Above Goldman Sachs' estimate of $0.16 and consensus estimate of $0.17.
• Search traffic drag on experiences businessAbout 5 percentage pointsCreated a drag on bookings and gross booking value growth.
• 2026 revenue forecast$1.55bnLowered from $1.90bn.
• 2026 adjusted EBITDA forecast$223mnLowered from $319mn.
• 2026 GAAP EPS forecast$0.08Lowered from $0.55.
• Recent debt repurchase$345mnOn April 1, 2026, the company used existing cash to repurchase senior notes due in 2026.

Impact & implications

The sale of TheFork will make Tripadvisor's business portfolio more concentrated on the experiences market and provide about $680mn in net funds for deleveraging or share repurchases, potentially improving future earnings per share and capital returns. However, the sharply lowered 2026 to 2028 revenue and EBITDA forecasts indicate that the balance sheet improvement from the transaction coexists with near-term operating pressure in the core business. Realization of the investment thesis depends on stabilization of search traffic, improved paid marketing efficiency, Viator's continued market share gains, and whether cost optimization can translate into higher free cash flow.

Risks

• Iterations of Google's travel advertising products and generative AI may reshape online travel traffic entry points, weakening Tripadvisor's organic search traffic and advertising value.
• The shift from free search traffic to paid marketing channels may raise customer acquisition costs and depress near-term margins.
• Geopolitical uncertainty, consumer budget sensitivity, and weakening U.S.-to-Europe travel demand may continue to affect bookings and average order value.
• Extreme heat and unusual weather may increase cancellation rates, causing volatility in experiences business revenue.
• Structural traffic pressure in hotels and other business may exceed expectations, with third-quarter revenue expected to decline further by 20% to 23%.
• If penetration of the online travel experiences market is slower than expected, Goldman Sachs' forecasts for experiences business growth and scaled profitability may be too optimistic.
• There are execution risks around completion of the TheFork transaction and the pace and returns of using proceeds for deleveraging or share repurchases.
• Goldman Sachs has investment banking, shareholding, market making, and other securities service relationships with Tripadvisor; investors should assess potential conflicts of interest in conjunction with the disclosures.

What to watch

• Whether the search traffic headwinds seen in June and July stabilize in subsequent quarters.
• Demand in the U.S.-to-Europe travel corridor, cancellation rates, and changes in consumer preference for lower-priced experiences products.
• Experiences business bookings, gross booking value, average booking value, and adjusted EBITDA margin.
• The expected 20% to 23% third-quarter revenue decline in hotels and other business and progress on fixed cost reductions.
• Customer acquisition costs, marketing return on investment, and margin impact after the shift from free traffic to paid marketing.
• Regulatory approval, completion timing, and final net proceeds from the sale of TheFork.
• Allocation of about $680mn in net transaction proceeds between debt repayment and share repurchases.
• Incremental traffic and conversion effects from Viator's cooperation with Google Gemini and other AI platforms.
• Whether revenue growth recovery, free cash flow expansion, and net leverage reduction can be delivered from 2027 to 2028.