Hotel Search Platform Trivago Prices IPO Well Below Expectations
Hotel search platform Trivago finalized plans for its upcoming initial public offering on Thursday, and its debut price and total available shares will both be well below expectations. The travel firm, which is majority owned by Expedia (EXPE - Free Report), will offer 26.1 million shares at $11 per share.
Previous reports indicated that Trivago was gearing up to offer 28.5 million shares somewhere between $13 per share and $15 per share. The lower price seems to underscore investors’ concern that the company relies on too few travel companies for its revenue.
Trivago is a hotel search aggregator that sorts through hotel deals from a variety of online travel sites. It’s a free to use platform for consumers, which means the company makes its cash from online travel agencies that pay it each time a customer clicks on one of its deals.
Expedia is a major customer, contributing 35% of total revenue between it and its subsidiaries, Travelocity and Hotwire. Industry competitor Priceline (PCLN - Free Report) and its Booking.com entity contributed to about 43% of Trivago’s total revenue.
These online travel agencies have struggled as hotel and transportation companies continue to build out their own online platforms, which encourage direct booking. Trivago’s IPO also comes at the end of a tough year for technology IPOs.
Total IPO value is down about 40% this year, with IPOs in the internet services industry down about 41%. Trivago was one of a few tech companies identified in Renaissance Capital’s IPO outlook report earlier this year (Also read: Here's 3 Tech Companies That Could IPO Before the End of 2016).
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