Shares of TripAdvisor Inc. tumbled more than 15 percent Thursday, after the travel website reported fourth-quarter results that fell short of Wall Street expectations and issued a disappointing revenue prediction for the current year.
THE SPARK: TripAdvisor said late Wednesday that it earned $22 million, or 16 cents per share, up 19 percent from $18.4 million, or 14 cents per share, in the fourth quarter of 2010. Revenue rose 44 percent to $100.3 million from $69.8 million.
Analysts polled by FactSet expected a profit of 24 cents per share on $134.6 million in revenue.
THE BIG PICTURE: TripAdvisor, which was spun off from Expedia in December, lets travelers post advice and reviews and offers planning features such as flight searches and links to hotel and flight bookings.
The Newton, Mass.-based company posted steep increases in advertising revenue for the quarter, but still failed to meet average analysts' expectations for revenue or profit. Investors also didn't like TripAdvisor's prediction of 2012 revenue growth in the "mid to high teens."
THE ANALYSIS: Benchmark Co. analyst James Dobson cut his rating for Trip Advisor to "Hold" from "Buy," citing the revenue guidance. He also pointed to the company's plans for aggressive spending on search engine marketing this year, which is expected push its selling and marketing expenses significantly higher than they were in 2011.
"We still believe TripAdvisor has quality assets and strong growth potential," Dobson wrote in a note to investors. "However, increased spending levels, lower cost per click, and slower hotel traffic growth cause us to lower our recommendation to Hold."
Morgan Keegan analyst Justin Patterson also called the revenue guidance disappointing, but backed his "Market Perform" rating and raised his price target for the company by $2 to $30.
"Investments (this year) will position TripAdvisor for long-term success globally," Patterson wrote in a note. "Near term, we expect results will be choppy."
THE SHARES: In heavy trading, TripAdvisor shares were down $5.44, or 15.8 percent, by early afternoon, trading at $28.68. They earlier dropped as low as $27.99.
The shares are still up 25 percent from their December debut, and they traded around $24 in late December and early January and as high as $35.93 this month.