What happened

Shares of Trivago (NASDAQ:TRVG) were slipping last month after the hotel meta-search site delivered an underwhelming fourth-quarter earnings report and seemed to get pressured by weak guidance from rival Booking Holdings (NASDAQ: BKNG), as well as broader concerns about the industry.

As a result, the stock finished the month down 13%, according to S&P Global Market Intelligence. As you can see from the chart below, it was another rocky month for the volatile stock, but Trivago shares ended solidly in the red.

TRVG Chart

TRVG data by YCharts.

So what 

Trivago stock rattled between 10% gains and losses when its fourth-quarter earnings report came out on Feb. 6, but ultimately finished the day down 3.3%.  As the company continued to focus on monetization and controlling its advertising spend, revenue fell 8% in the quarter, to 166.8 million euros, matching estimates.

A woman relaxing at a hotel pool.

Image source: Getty Images.

Despite the falling revenue, the company's strategy delivered on the bottom line, as revenue per qualified referral improved from 1.27 euros to 1.44 euros. Return on advertising spend jumped from 118.4% to 162.6% as the company slashed selling and marketing expenses by 30%. That drove adjusted EBITDA up from negative 8.7 million euros to 28.6 million euros, and earnings per share of 0.03 euros topped estimates of 0.01 euros.

While the stock rebounded from that sell-off, shares then slid steadily over the second half of the month on macroeconomic concerns, including the potential for a "hard Brexit," which would disproportionately affect Trivago as its primary business is in Europe, and after Booking Holdings issued a disappointing forecast in its earnings report at the end of the month, due largely to macro issues.

Check out the latest earnings call transcript for Trivago.

Now what

For the year ahead, Trivago said revenue would continue to decline in the first half of the year but return to growth in the second half of 2019 as it laps the recent slide. On the bottom line, the company sees adjusted EBITDA of 50 million to 75 million euros, up from 15.6 million in 2018.

In the first week of March, Airbnb, ahead of a likely IPO, said it would acquire the last-minute hotel-booking app HotelTonight, bringing it in more direct competition with Trivago. Trivago has been focused on diversifying its listings to include "alternative accommodations" like vacation rentals and it now has more than 1.5 million such listings. 

However, Airbnb's move signals that the industry is only likely to grow more competitive, especially when it gains added firepower from its IPO. That could make it even more difficult for Trivago to fulfill its promise.

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.