Travelzoo Stock Price Tumbles as Costs Devour Profit
Skift Take
CEO Holger Bartel has been angling his deals company into a smarter business model. But the cost of Travelzoo's investments continues to drag down earnings. Investors responded by shaving 30 percent off the company's share price on Wednesday.
Travelzoo, whose best-known product is a deals newsletter, seemed to be having a good year until it reported its second-quarter earnings on Wednesday.
The leaden reality of lower than expected revenues and profits led investors to knock 30 percent off the share price by midday Wednesday, to $13.
Economic strength in the company's key markets of North America, Europe, and Asia Pacific should have been reflected in a boost in company performance in the three months to June 30.
While the New York City-based company booked revenue that was up 6 percent year-over-year, its revenue of $28.1 million undershot market expectations.
Net income for the second quarter was $477,000. Higher investment in marketing drove a decline in earnings per share from the previous quarter.
CLARIFICATION: Although investors shaved 30 percent off Travelzoo's share price, when this reporter wrote “revenue undershot market expectations," I was wrong because the market consensus for second-quarter revenue was $28 million and Travelzoo delivered $28.1 mi
