Tripadvisor’s Sale of TheFork Viewed as Value-Adding but Not Improving Long-Term Outlook, States Jefferies

Tripadvisor Inc (NASDAQ: TRIP) has agreed to sell its European restaurant reservation service, TheFork, to American Express for $700 million in cash. Jefferies analysts noted that this transaction simplifies Tripadvisor’s corporate structure and adds value to its overall valuation, but it does not fully address the ongoing challenges in the company’s core operations.

Details of the TheFork Sale

The sale was widely anticipated following Tripadvisor’s prior announcement that it was exploring strategic options for TheFork. The transaction is expected to close before the end of the 2026 fiscal year, with net proceeds estimated to be close to the gross sale price.

Tripadvisor has indicated that the proceeds could be used for stock buybacks, debt reduction, or acquisitions within its Experiences division.

Jefferies’ Valuation and Price Target Revisions

Following the announcement, Jefferies raised their price target for Tripadvisor shares from $8.50 to $11, reflecting the higher-than-expected valuation achieved through the TheFork deal. At the time of reporting, Tripadvisor shares were trading around $12.50.

The brokerage estimates that the sale price represents approximately 2.5 times TheFork’s projected 2027 revenue and about 19 times its 2027 EBITDA, which is a premium compared to typical valuations in the small- and mid-cap internet sector.

Using a sum-of-the-parts analysis, Jefferies assigns roughly $4 per share of value to TheFork, an additional $4 to the Viator business, and approximately $3 to Tripadvisor’s Hotels segment, which continues to be the largest part of the company.

Concerns Over Long-Term Outlook

Despite the favorable valuation from the sale, Jefferies maintains an ‘Underperform’ rating on Tripadvisor stock. The firm cites concerns about weakening profit prospects in the remaining business segments.

Jefferies forecasts continued declines in the Hotels segment, which is expected to negatively impact overall company growth. However, this decline may be partially offset by growth in Viator, Tripadvisor’s experiences marketplace.

Specifically, Jefferies projects a mid-single-digit decrease in Tripadvisor’s pro forma EBITDA through 2028, including approximately a 20% annual drop in Hotels EBITDA and an estimated 25% yearly increase in Experiences EBITDA.

The firm also highlighted risks associated with Tripadvisor’s fiscal 2026 guidance, noting that significant improvements in revenue and profits will be required in the second half of the year to meet expectations.

Key Takeaways

  • Tripadvisor agreed to sell TheFork to American Express for $700 million in cash.
  • The transaction simplifies Tripadvisor’s corporate structure and adds valuation but does not solve core operational challenges.
  • Jefferies raised the price target from $8.50 to $11 but maintains an ‘Underperform’ rating due to weakening profit outlook.
  • TheFork sale price reflects a premium valuation compared to peers.
  • Forecasts indicate continued declines in Hotels EBITDA partially offset by growth in Experiences EBITDA.
  • Meeting 2026 fiscal guidance will require substantial second-half improvements in revenue and profits.