What happened

Shares of Trivago N.V. (NASDAQ:TRVG) were moving higher today, though there was no obvious cause for the hotel-booking specialist's gains. One possibility is a short squeeze, which happens when a heavily shorted stock jumps on short-seller fears that the stock is rebounding, but there was no clear reason for such action. The stock closed up 13.8%.

A bed in a hotel room

Image source: Trivago.

So what 

Shares of Trivago were heavily traded today as volume was at 3 million at the close of the session compared to a recent average of just 653,000 shares traded daily. Such heavy trading is usually a sign of a short squeeze. Only 2.4% of shares outstanding are sold short, but nearly a third of the float, or the shares available for public trading, is sold short, indicating that a significant number of investors are betting against the stock. 

Considering Trivago's recent troubles, including a dramatic slowdown in revenue growth as bidding patterns among its partners shifted, it's not surprising that investors think it will keep falling, especially as the stock recently hit an all-time low.

Now what 

The rest of the online travel agency sector, including Booking HoldingsExpedia, and TripAdvisor, was quiet, adding another reason to believe Trivago's gains today were the result of a short squeeze. Though the double-digit jump is good news for shareholders, the company's fundamentals will have to change significantly in order for the stock to return to its former heights.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.