What happened
Shares of Trivago N.V. (TRVG -2.31%) were surging again today as the hotel-booking platform's momentum from yesterday's surprise quarterly profits continued for a second straight session. After finishing up 11% yesterday, Trivago shares tacked on another 14.9% today as of 12:21 p.m. EDT.
Image source: Trivago.
So what
There was no additional news out on Trivago today, but the stock may be benefiting from the broader recovery in the market after stocks broadly tumbled yesterday. Trivago stock was up as much as 26% yesterday before giving back some of those gains over the course of the trading session.
In the third-quarter report, Trivago reported its first profit in more than a year at $0.03 per share, bucking expectations of a penny-per-share loss. Though the company's revenue fell 12%, that seemed in part by design, as management scaled back on advertising spending in order to deliver a higher return on advertising and therefore positive EBITDA and a bottom-line profit.
The stock may also be benefiting from a short squeeze, as about a third of the float is sold short, following the stock's collapse since its peak last summer.
Now what
Trivago offered positive EBITDA guidance for the fourth quarter, calling for $3 million to $13 million in EBITDA, a sign that profitability should continue, but it did not provide any other specific numbers in its guidance. CEO Rolf Schromgens said the company would focus first on rebalancing the business on a profitable level and then on building top-line growth from there. The company took an important first step in its turnaround efforts by controlling its advertising expense, which should give investors some reassurance going forward.
