Shares of Tripadvisor (NASDAQ: TRIP) were moving higher Tuesday after the company said that it had formed a special committee to evaluate potential offers to buy the company or related transactions. As of 12:25 p.m. ET, the stock was up 12.4%.
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Tripadvisor could go private
The board's decision came in response to interest from Liberty Tripadvisor (NASDAQ: LTRPA), which owns 21.1% of the stock, and has also said it was evaluating potential alternatives for Tripadvisor, meaning it could acquire the company.
Tripadvisor has retained Centerview Partners as a financial advisor in the matter.
Tripadvisor stock has been struggling for years as audiences have gone elsewhere and online advertising demand has been weak due to competition from Google and others.
Though Liberty Tripadvisor only owns 21.1% of Tripadvisors' shares outstanding, the company effectively has a majority voting interest in it along with the CEO of LibertyMedia, Greg Maffei, who is also a major shareholder in Tripadvisor.
It's unclear what the potential buyout price would be, but taking the company private might make sense given the stock's disappointing returns.
What's next for Tripadvisor
Tripadvisor is set to report fourth-quarter results after hours on Thursday, and investors should expect an update on a potential sale at that time.
As far as the fourth quarter, analysts are expecting to hear that revenue increased 5.8% to $374.4 million, and that adjusted earnings per share improved to $0.22 from $0.16 in the year-ago period. While that would be a solid improvement on the bottom line, the top line forecast significantly trails the broader travel industry, which is one reason why a sale may be the best option for the company and its shareholders.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tripadvisor. The Motley Fool has a disclosure policy.
