TripAdvisor, Inc. (NASDAQ:TRIP) Tuesday posted third-quarter revenue that missed estimates, sending the stock down more than 16 percent. The online travel company posted a profit of $55 million, or 37 cents a share, in the quarter, compared with $74 million, or 51 cents a share, a year earlier. Excluding certain items, profit was 53 cents a share. Analysts had projected adjusted earnings of 52 cents per share. Revenue rose 1.4 percent to $421 million in the third quarter, missing analysts’ estimates of $436.3 million.
“Now that we have our transaction products in place, and we have been able to learn and improve, our 2017 focus will shift to reaccelerating revenue growth in our hotel business, and we believe paid marketing channels will play an important role,” the company said. TripAdvisor stock dropped as much as 16.85 percent to $52.47 in the early trading. The stock was down 26 percent this year.
The worse-than-expected revenue was due to climbing expenses and declining hotel revenue. Hotel sales dropped to $320 million from $340 million a year earlier and it accounted for about 76 percent of total revenue. While expenses rose 8.6 percent to $355 million. Marketing costs climbed 6.7 percent to $210 million.
The online travel company also faced more competition in the industry. It not only competes with Expedia Inc. and Priceline Group Inc., but also competes with new rivals like Kayak and Airbnb Inc. The company now expects EBITDA to be lower for the next fiscal year.