After five months of declines, the out-of-favor hotel listings site sees the first signs of a turnaround.
Rick Munarriz (TMFBreakerRick) Dec 8, 2017 at 12:09PM
It's been a brutal rookie year for Trivago (NASDAQ:TRVG) and its investors, but the stock may be bottoming out here. Shares of the hotel metasearch specialist opened 13% higher on Friday after Deutsche Bank analyst Lloyd Walmsley upgraded Trivago from Hold to Buy. He's sticking to his $10 price target, but with the beating the stock has taken lately that represents a healthy 50% of upside from Thursday's close.
Walmsley walked away from a Trivago analyst presentation on Thursday afternoon feeling as if clearer skies are ahead. He feels that the rough bidding environment that has rocked Trivago since its summertime peak will stabilize by the second half of next year, if not sooner. Shares were trading lower for the sixth consecutive month before Walmsley's upgrade pushed Trivago into positive territory for December.
Turning off the "fasten your seatbelts" sign
Trivago is a week away from celebrating its first year of trading, and it's been a turbulent ride. The stock went public at $11 in mid-December 2016, and more than doubled to hit an all-time high of $24.27 in July. The shares would go on to shed more than 73% of their value when they bottomed out earlier this week at $6.45.
Sharply decelerating growth has been the culprit of Trivago's fall from grace. Investors were lulled into complacency after seeing revenue soar 68% and 67%, respectively, in its first two quarters as a public company were rocked hard over the summer when it hosed down its full-year growth outlook. Revenue would go on to rise just 17% in its poorly received third quarter, with its even lower full-year guidance implying just 2% to 15% growth for the fourth quarter. It also warned that a return to top-line growth was unlikely until the latter half of 2018.
Unlike most travel portals that generate revenue off of actual bookings generated through their gateways, Trivago lets other sites, booking agencies, and actual property owners bid for ad placement on its hotel listing pages. The lion's share of its revenue is generated from the world's two largest travel portals -- Priceline.com and former parent Expedia -- and as they began to get smarter about the bidding process during the third quarter, Trivago saw its revenue per referral start to slip.
Walmsley isn't the first Wall Street pro to see Trivago in the single digits as a compelling entry point. Citi analyst Mark May upgraded the stock last month, pointing out that Priceline's Booking.com was going back to displaying regional landing pages on Trivago. If Priceline is starting to spend more on Trivago, it's a safe bet that Expedia will be following suit.
Naturally, where Trivago lands in terms of its wide top-line growth range for the current quarter will dictate if Friday's pop is warranted. Any more color that it can provide on how 2018 will play out will also be huge. Trivago stock has taken a big hit since peaking five months ago, but after five months of negative returns investors may be finally getting a break in December.
Recent TRVG News
- trivago Deepens Partnership With Ai-Driven Tech Platform Holisto • GlobeNewswire Inc. • 07/30/2024 09:41:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 07/30/2024 08:35:32 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 07/30/2024 08:11:30 PM
- Form EFFECT - Notice of Effectiveness • Edgar (US Regulatory) • 07/25/2024 04:15:04 AM
- Form DEL AM - Delaying amendment • Edgar (US Regulatory) • 07/16/2024 07:04:47 PM
- Form S-8 - Securities to be offered to employees in employee benefit plans • Edgar (US Regulatory) • 07/15/2024 08:36:10 PM
- trivago N.V. Announces Annual General Meeting of Shareholders • GlobeNewswire Inc. • 05/23/2024 11:41:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 05/23/2024 11:32:07 AM
- While Price Conscious, US Consumers See Vacation’s Positive Impact on Mental Health • GlobeNewswire Inc. • 05/16/2024 12:39:00 PM
- trivago N.V.'s First Quarter 2024 Earnings Release Scheduled for April 30, 2024; Webcast Scheduled for May 1, 2024 • GlobeNewswire Inc. • 04/22/2024 12:03:00 PM
- Robin Harries assumes CFO role at trivago • GlobeNewswire Inc. • 04/02/2024 10:30:00 AM
- Form 20-F - Annual and transition report of foreign private issuers [Sections 13 or 15(d)] • Edgar (US Regulatory) • 03/01/2024 12:24:06 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/06/2024 09:04:46 PM
- trivago N.V.'s Fourth Quarter 2023 Earnings Release Scheduled for February 6, 2024; Webcast Scheduled for February 7, 2024 • GlobeNewswire Inc. • 01/24/2024 11:00:00 AM
- trivago Unveils a Bold Brand Refresh and AI powered TV Ads • GlobeNewswire Inc. • 12/14/2023 10:57:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/05/2023 12:06:02 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 11/01/2023 08:08:11 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 11/01/2023 08:03:45 PM
- trivago Announces Ex-Dividend Date for Extraordinary Dividend and Updates Effective Date for the Ratio Change under its American Depositary Share Program • GlobeNewswire Inc. • 11/01/2023 11:06:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 10/27/2023 11:35:46 AM
- trivago Announces Ratio Change under its American Depositary Share Program • GlobeNewswire Inc. • 10/27/2023 10:06:00 AM
- trivago N.V.'s Third Quarter 2023 Earnings Release Scheduled for November 1, 2023; Webcast Scheduled for November 2, 2023 • GlobeNewswire Inc. • 10/17/2023 10:00:00 AM
- trivago N.V. to Welcome New Chief Financial Officer • GlobeNewswire Inc. • 10/05/2023 10:06:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 10/05/2023 10:03:38 AM
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