Trivago Concedes It Overspent on Advertising and Lowers Forecasts
Skift Take
Trivago says this was just a hiccup. But they’re vague about why they were surprised and what precisely happened. We suspect a Priceline sucker punch.
A revenue shortfall tied to the way Trivago works with advertisers kicked in faster than expected, and the hotel-search site, known for its omnipresent TV advertising, didn't tamp down its commercials fast enough.
That led Trivago Wednesday to revise downward its forecast for revenue and profit for the second half of the year.
At the end of July, the Düsseldorf-based hotel search giant had been confident its 2017 revenue growth would be 50 percent higher than its 2016 revenue. Today, it lowered that expectation to be only 40 percent higher than anticipated.
Investors responded by swiping a fourth off the value of the company -- erasing nearly all of the gains of this year -- in early morning trading. [UPDATE: By New York's market close, it had regained some ground and lost only 16 percent from the day before.]
While the new forecast of a 40 percent year-over-year revenue growth would still be impressive for most companies, investors were disappointed that the forecasted earnings before income, taxes, depreciation, and amortization in 2017 would be lower than in 2016.
In other words, Trivago's paltry 2016 profits — as it emphasizes growth over profits — would be higher than in 2017.
The public company, controlled by Expedia, issued a statement that
