There have been more outs than "inns" at hotel metasearch specialist Trivago (NASDAQ:TRVG) these days. The stock plunged 31.1% last week, coming undone after posting problematic financial results for the third quarter.

Trivago posted a widening quarterly deficit on a 17% uptick in revenue. It's a far cry from the top-line growth of 68% and 67% that Trivago posted in the first and second quarters, respectively, but that wasn't the deal breaker. The quickly fading dot-com darling had warned early last month that full-year growth would clock in at 40%, implying growth would be in the teens during the latter half of the year. The real problem is that Trivago is now eyeing just 36% to 39% growth for all of 2017. It may not seem like much of a tweak, but it translates into growth of just 2% to 15% for the final quarter.

It gets worse. Trivago is warning that it's unlikely to post revenue growth during the first half of next year, returning to positive results in the latter half of last year. 

A Trivago booth at a travel conference in Spain.

Image source: Trivago.

Bumpy landing

Trivago's now a busted IPO, falling to the single digits after going public at $11 late last year. The stock had peaked in the mid-$20s earlier this year. Last week's disappointing third-quarter results is just the latest step down for the stock. 

There are some serious questions about Trivago's model, where advertisers bid on placement of the site's lodging listings. Its platform generated a 20% year-over-year increase in qualified referrals, but the average revenue per referral has fallen by 3%. Trivago is warning that several of its larger advertisers -- online travel portals, mostly -- began testing new bidding strategies by the end of the third quarter. The tests have had a negative impact on Trivago's revenue and profitability. 

A couple of analysts would go on to downgrade the stock. Nat Schindler at Bank of America/Merrill Lynch lowered his rating to underperform and his price target from $14 to $8. He sees a vicious cycle where Trivago is generating less per referral while at the same time having to budget less to attract traffic. Guggenheim is also downgrading the shares from buy to neutral. 

A tip of the hat should also go out to Lloyd Walmsley at Deutsche Bank, who had slashed price targets for the leading online travel portals ahead of the report. He took his price goal for Trivago down from $20 to $13, which if anything may seem too high in light of the troublesome report. 

Trivago isn't dead. We still don't know if it will be able to tweak its model to thrive in a climate where advertisers are testing new bidding strategies. We don't know if new advertisers will step up to take advantage of the opportunity of cheaper leads. Things don't look promising right now, but growth investors know that disruption breeds opportunity. Your move, Trivago.

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