Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Trivago Stock Jumped Today

By Bradley Seth McNew - Apr 28, 2017 at 2:48PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The travel company showed that it has room to grow in the increasingly crowded OTA market.

What happened

Shares of Trivago NV (ADR) (TRVG 2.01%), the relatively small online travel agent (OTA) company headquartered in Germany, rose as much as 15% today after the company updated full-year 2017 guidance on the back of a strong start to the year. 

So what

Expedia (EXPE 1.66%), one of the largest OTA players, is Trivago's largest stakeholder as it owns more than 60% of the company. When Expedia reported better-than-expected Q1 earnings yesterday, it made sense for Trivago to update its own guidance to stay transparent ahead of its own Q1 earnings, which will be announced on May 15.

In the updated guidance release, Trivago CFO Axel Hefer said: 

With a strong focus on improving our hotel search product and market leading innovation, we look forward to reporting our financial results on May 15, 2017. Given our strong start to the year, we have increased our full-year guidance and now expect annual revenue growth to be around 50% in 2017, with our adjusted EBITDA margin likely to be up slightly from 2016.

A man entering a hotel room pulling his luggage behind him.

Image source: Getty Images.

Now what

Trivago is part of an increasingly crowded OTA market, as the big players in this space try to fend off newer entrants. TripAdvisor (TRIP 3.76%) has been trying with mixed success to transform itself from a review platform to one that customers book directly through after it became apparent how much more lucrative those operations could be compared to just advertising within travel search and reviews. Other viable entrants such as Google, which has also started its own travel search and direct book platform, are making the space harder to grow in.

However, Trivago's partnership with Expedia and unique marketing -- along with a growing total online travel booking market -- show that there's clearly a path for this smaller competitor to continue gaining. Trivago only went public in December 2016, but already its share price has increased 42% from its IPO price. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Trivago Stock Quote
$1.52 (2.01%) $0.03
TripAdvisor, Inc. Stock Quote
TripAdvisor, Inc.
$18.47 (3.76%) $0.67
Expedia, Inc. Stock Quote
Expedia, Inc.
$96.40 (1.66%) $1.57

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.