Trivago N.V. (NASDAQ:TRVG)Giving Partners a Break
Faced with a drop of more than 95 percent in referral revenue in the last week of the first quarter, Trivago informed investors that it has started to “make changes to our organizational setup,” including “significant” headcount reductions.
Other than chopping jobs, and reducing costs, Trivago didn’t specify what organizational changes it is making.
Referral revenue comes from the clicks Trivago charges advertisers when it sends them leads for hotel or vacation rental bookings. In 2019, Trivago generated 74 percent of its revenue from Booking Holding and Trivago’s parent company, Expedia Group, so it’s clear these two companies virtually turned off their advertising spend.
Trivago notched a small profit, roughly $18.7 million (euro 17.2 million) in 2019, but was already struggling heading into 2020.
In a letter to shareholders last week, Trivago said it reduced its advertising spend “to an absolute minimum” because of the coronavirus-driven drop-off in demand.
In April, the company’s marketing, sales and human resources teams in its Germany headquarters started reduced working hours.
The German government, under its Kurzarbeit plan, is subsidizing a portion of Trivago’s payroll, but job cuts are coming, the company said.
As part of its reorganization, Trivago said “we are targeting a substantial reduction in our cost base going forward.”
Shayne Heffernan Trade Idea
“We currently have a price target of $2.26 which would give the stock a 30.64% increase.”
Why This Matters
Like Tripadvisor, which is giving a break on subscription bills to hotel and restaurant partners, Trivago said: “We have accommodated the requests of many advertisers to extend payment dates and to pay outstanding invoices in installments.”
In contrast, Trivago was among eight German startups that pleaded with Google to give them relief from a portion of their first quarter advertising bills.
Google declined to comment for this article on what relief it is giving to partners other than referring Skift to the comments it made last week about the eight German startups.
“Our travel partners are facing unprecedented challenges and we’re working with partners to help protect their businesses, including helping them surface their cancellation policies in our travel search products and expanding our ‘pay per stay’ pilot earlier this month to all hotel ads partners globally to shift the cancellation risk from our partners to us,” a Google spokesperson said last week.
Trivago said it would report its first quarter results by June 5, “and it is likely that we will record a significant impairment charge.”
Impairment charges relate to acquisitions. In 2017, Trivago acquired the assets of Tripl to enhance personalization efforts, and Trivago also owns 49 percent Myhotelshop.
In other news, Johannes Thomas, managing director for advertising relations, stepped down from the company’s management board, and will stay on as a strategic advisor, the company said.
Shares of Trivago were trading at around $1.71 per share late Monday.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 1.97.
The projected lower bound is: 1.46.
The projected closing price is: 1.72.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 3 white candles and 6 black candles for a net of 3 black candles. During the past 50 bars, there have been 20 white candles and 27 black candles for a net of 7 black candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 53.1250. This is not an overbought or oversold reading. The last signal was a sell 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 52.59. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 35 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -17. This is not a topping or bottoming area. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 33 period(s) ago.
Rex Takasugi – TD Profile
TRIVAGO N V closed up 0.040 at 1.730. Volume was 67% below average (consolidating) and Bollinger Bands were 35% narrower than normal.
Open High Low Close Volume 1.680 1.750 1.630 1.730 108,984
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bearish
Moving Averages: 10-period 50-period 200-period Close: 1.72 1.65 3.05 Volatility: 63 99 77 Volume: 196,584 377,631 345,757
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
TRIVAGO N V is currently 43.3% below its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods.
Our volume indicators reflect moderate flows of volume into TRVG.O (mildly bullish). Our trend forecasting oscillators are currently bullish on TRVG.O and have had this outlook for the last 17 periods.
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