Trivago Faces a Challenging 2020

When Trivago (NASDAQ: TRVG) hit the public markets in 2016, the hotel-booking specialist looked set to join a successful parade of online travel agency stocks, including Booking Holdings (NASDAQ: BKNG), which was Priceline Group at the time; Expedia (NASDAQ: EXPE); and TripAdvisor.

At first, Trivago shares surged as revenue growth boomed. But the bull story soon changed as the company's relationship with Booking, its biggest partner, soured and the competitive landscape in the travel industry changed. Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google has become a major player in hotel meta-search, which is Trivago's core business, pressuring established online travel agencies. Its bidding partners like Expedia and Booking Holdings have begun focusing on generating more direct traffic to their sites rather than through Trivago; and the industry in general is maturing as growth is slowing across the board.

Trivago's fourth-quarter earnings report makes clear that those trends are likely to persist through 2020. The stock plunged as much as 21% on Wednesday as revenue fell 7% to 155.5 million euros ($169.7 million), a reflection of the company's decision to pull back on marketing to get more valuable search traffic. On the bottom line, adjusted EBITDA fell by 33% to 18.4 million euros, and earnings per share slipped from 0.03 euros to 0.01 euro.

Source Fool.com