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Tripadvisor stock (NASDAQ: TRIP) jumped 8% on July 2 — far outpacing the S&P 500’s modest 0.47% gain — after activist investor Starboard Value disclosed a more than 9% stake in the online travel firm. The roughly $160 million position sent shares up another 7% in after-hours trading Wednesday.

The timing of Starboard’s move is notable. Tripadvisor has struggled lately, with shares down about 15% over the past year, and the company has been exploring strategic alternatives since early 2024. That process began shortly after Tripadvisor struck a $435 million deal to buy out its majority owner, Liberty TripAdvisor, last December. In January, the company also disclosed receiving a non-binding offer from a strategic bidder.

Despite the activist buzz, Tripadvisor’s fundamentals tell a more sobering story. That said, those seeking growth with less volatility than individual stocks might explore the High Quality portfolio, which has outpaced the S&P 500 with returns exceeding 91% since inception. Separately, see Seagate Stock to $85?

Valuation: Not a Bargain

At first glance, Tripadvisor may appear attractively priced, with a price-to-sales (P/S) ratio of 1.0 versus the S&P 500’s 3.1. However, a closer look reveals a far less compelling valuation. The company trades at a price-to-free cash flow (P/FCF) ratio of 61.3, nearly three times the S&P 500’s 20.9, and a price-to-earnings (P/E) ratio of 41.1, well above the benchmark’s 26.9. These elevated multiples suggest that investors are paying a steep premium for a company delivering lackluster financial performance. Also, see our analysis on Tripadvisor’s valuation.

Revenue Stalled and Margins Are Weak

Tripadvisor’s top-line growth momentum has decelerated, with revenue increasing just 1.4% over the past 12 months and a mere 0.8% year-over-year in the latest quarter. This slowdown raises concerns about the company’s ability to sustain future growth. At the same time, Tripadvisor is struggling to translate sales into profits. Its operating margin stands at a modest 6.5% for the last four quarters, while its free cash flow margin is just 5.8%, well below the S&P 500’s 14.9%. The company’s net margin fares even worse at 2.9%, compared to 11.6% for the broader market. These weak profitability metrics underscore Tripadvisor’s challenges in delivering shareholder value.

Financial Health: Mixed Picture

Tripadvisor’s balance sheet presents a mixed picture. The company carries $1.3 billion in debt, resulting in a debt-to-equity ratio of 68.9%—significantly higher than the S&P 500 average of 19.4%. However, this leverage is partially offset by a robust cash position, with $1.2 billion in cash and equivalents representing a solid 42% of total assets. While the elevated debt raises some concerns, Tripadvisor’s strong liquidity provides a meaningful buffer.

Resilience in Downturns: Troubling History

Tripadvisor stock has historically underperformed during market downturns. During the 2022 inflation-driven selloff, TRIP plunged 60.5%, more than double the S&P 500’s 25.4% decline. Similarly, during the COVID-19 pandemic, the stock fell 53.9%, again lagging the broader market. Notably, Tripadvisor has yet to reclaim its pre-pandemic highs and currently trades around $15—less than a quarter of its 2021 peak—underscoring its limited resilience in turbulent conditions. Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.

The Bottom Line

Tripadvisor falls short where it counts most. While its growth has been decent, that momentum is clearly fading. Profitability remains very weak, and although the company’s financial position is relatively solid, it is far from bulletproof. Its resilience in economic downturns has been extremely poor, and the current valuation appears disconnected from its underlying fundamentals. Even with renewed interest from activist investor Starboard Value, Tripadvisor presents a weak case for long-term investors. Its high valuation, coupled with sluggish growth, thin margins, and a track record of underperformance in volatile markets, makes it an unattractive bet.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.