Trivago's IPO falls below expectations - source (updated)

trivago NV

16/12/2016 24:31

(Adds company and industry background) 
    By Lauren Hirsch 
    Dec 15 (Reuters) - Trivago GmbH  TRVG.O , the hotel search 
platform that is majority owned by U.S. online travel firm 
Expedia Inc  EXPE.O , raised $287 million in an initial public 
offering (IPO) on Thursday, far below expectations, according to 
a person familiar with the matter. 
    The underwhelming pricing of the Düsseldorf, Germany-based 
company's offering reflects some concerns among investors, in a 
challenging year for technology IPOs, that it may be too reliant 
on a few online travel companies for its revenue. 
    Trivago priced 26.1 million American depository shares (ADS) 
on Thursday, fewer than its planned 28.5 million. At $11 an ADS, 
the pricing was also below its indicated range of $13 and $15, 
the source said, asking for anonymity become the details are not 
yet public.  
    Expedia and Trivago did not immediately respond to a request 
for comment.   
     The downsized IPO comes on the tail-end of a difficult year 
for IPOs. Amid investor jitters and poor post-IPO performances, 
the total amount raised by IPOs is down 42 percent so far this 
year, according to Thomson Reuters data. Proceeds raised by 
internet software and service companies such as Trivago are $450 
million, down 41 percent from $762 million this time last year.  
    Hotel booking platforms such as Trivago allow customers to 
search through hotel deals aggregated across a variety of online 
travel sites. It makes much of its money from online travel 
agencies, which pay for each click a customer makes on their 
hotel offers.  
    Majority shareholder Expedia is one of its biggest 
customers, which along with brand affiliates such as Travelocity 
and Hotwire comprised 35 percent of its total revenue this year 
through the end of September. Priceline Group Inc  PCLN.O  and 
its affiliated brands such a Booking.com, contributed 43 percent 
of the company's revenue through the same time period. 
    Global travel spend grew to an estimated $1.1 trillion in 
2015, excluding Canada, Latin America and Eastern Europe, a 
compound annual growth rate of 4.7 percent since 2010, according 
to Phocuswright Data cited in Trivago's prospectus. 
    Still, the industry has been challenged by the increasing 
number of hotels that encourage booking directly through their 
own websites.  
    Trivago rival Tripadvisor Inc  TRIP.O  has seen its stock 
tumble in recent months, as its growth has slowed and it has 
sought to shift to a model that allows customers to book 
directly.  
    Expedia paid 477 million euros ($531 million) in 2012 for a 
62 percent stake in Trivago. 
    Trivago will list on Friday on the Nasdaq under the ticker 
symbol "TRVG." 
    JPMorgan Securities LLC, Goldman Sachs & Co and Morgan 
Stanley & Co LLC are among the underwriters. 
 
 (Reporting by Lauren Hirsch; Editing by Sandra Maler and Lisa 
Shumaker) 
 ((Lauren.Hirsch@thomsonreuters.com; 646 223 6356;)) 
 
Keywords: TRIVAGO IPO/