Online Travel Agencies Slide After Trivago Cuts Guidance

The shares of online travel agencies are falling after one of the companies in the sector, Trivago (TRVG), lowered its 2017 guidance.

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GUIDANCE CUT: Trivago now estimates that its 2017 revenue will increase 40%, down from its previous estimate of a 50% gain. The company predicted that its earnings before interest, taxes, depreciation, and amortization, excluding certain items, would decline in 2017 versus 2016. Trivago blamed the reduced guidance primarily on lower than expected revenue per qualified referral, or RPQR, and overspending on TV advertising in light of the RPQR miss. The company said that tough comps, given the "exceptionally strong summer period" in 2016, and adverse foreign exchange fluctuations also negatively impacted its guidance.

PRICE ACTION: In morning trading, Trivago tumbled 20% to $11.85, while Expedia (EXPE) and TripAdvisor (TRIP) each fell about 3% and Priceline (PCLN) lost a bit over 1%.

 

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