What happened
Shares of Trivago (TRVG 6.49%) were down 11.3% as of 1:30 p.m. EST Wednesday after the online travel platform specialist announced disappointing fourth-quarter 2019 results.
So what
Quarterly revenue fell 6.8% year over year to 155.5 million euros ($169.7 million), translating to net income of 3.1 million euros ($3.4 million), or 0.01 euro per share (down from 11 million euros, or 0.03 per share, a year earlier). Most analysts were modeling earnings of 0.01 per share on a more modest 4.8% revenue decline.
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Still, management remained optimistic.
"I am excited to see how Trivago is adapting to a rapidly changing market, and I am confident we are on the right track," CEO Axel Hefer said. "In 2020, we are focusing on building the most transparent and usable meta-search product in the market and integrating apartments and restricted rates into the platform."
Now what
CFO Matthias Tillmann added that in the first half of 2020, the company will "significantly invest into testing new concepts and approaches, and we will leverage the derived insights in the second half of 2020 and beyond."
But that also means investors should expect the company to forsake profitability in the near term as it pours resources into testing these new concepts. This isn't uncommon with innovative tech stocks, but there's no guarantee those investments will yield the desired fruit. Coupled with Trivago's underwhelming end to 2019, it's no surprise to see traders reeling in response.
