What happened

Shares of hotel-search platform Trivago (NASDAQ:TRVG) dropped again on Thursday, falling as much as 12%. Those declines moderated later in the trading day: The stock was down 4.5% at 2:21 p.m. ET.

The company reported third-quarter earnings before the market open Wednesday -- a release that propelled it to a more than 22% decline on the day. While revenue increased 17% year over year, the company's net loss per share widened to 7.7 million euros from 1.5 million euros in the year-ago quarter. But management's lowered guidance for full-year revenue is likely the main driver of the bearish sentiment toward Trivago stock that continued to punish it on Thursday.

Young couple walking into a hotel with rolling suitcases

Image source: Getty Images.

So what

Trivago had called for full-year revenue growth of 50% when it reported its second-quarter results in August. But management lowered its forecast in September to around 40%. With this latest revision, management now expects revenue growth in 2017 of between 36% and 39%.

The company said "increased testing activity" on its marketplace by several large advertisers, accompanied by changes in their bidding strategies, has had a negative impact on revenue and profitability --  hence, the lower guidance.

Now what

Trivago expects these challenges to persist, putting a drag on growth for the first six months of 2018. But management predicted a "return to a positive trajectory in the second half of 2018."

The company stressed that it has seen a decline in the percentage of revenue generated by its largest advertisers in the beginning of its fourth quarter. "Although we see challenges going forward, we believe this presents a longer-term opportunity to diversify our advertiser base and improve competition on our marketplace," management said.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool recommends Trivago. The Motley Fool has a disclosure policy.