Trivago Feels Scammy

For that reason we are revising our QuickIV which now suggests a valuation of $20/share.

Conclusion & Questions

Given that Expedia owns the majority of shares and is expected to acquire more it’s hard to get excited about the risk/reward here on either the long or the short side. Could be that this ends up being more of an ARB play than a fundamental investment. But shares are now trading for 10x what Expedia paid for them initially.

We’re watching what the large hotels chains do. Companies like Marriott certainly have the firepower to push deeper into the online consumer side of hotel booking. We’ve seen Google take a step into travel with Google Flights (remember they purchased ITA back in 2010 for $700M). Right now there doesn’t appear to be a reliable industry data source for hotels so if Google wants to do it they may need to partner more broadly with the big chains and make it easier for smaller hotels to integrate into Google search and booking.

Is this an area Yext (YEXT) could get into? Is there an equivalent of MindBody (MB) for smaller hotels?

It feels like Trivago (TRVG) fundamentals are on a collision course between a great experience for consumers and maximizing their per listing click revenue.

One wonders if Expedia will take steps to fix the data problems plaguing their service and the confusion from having a listing appear multiple times across different sites?

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Disclosure: We do not have any vested interest in the shares of this stock at the time of writing and publication. We may however take a position post publication and are not under any obligation to ...

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