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Before we get into our recommendation on how to play Trivago, which has changed its name from Travel BV (Nasdaq: TRVG), here's a look at how shares performed during their first day trading as a public company…
Trivago Stock Soars Following IPO
Trivago priced its initial public offering of 26.1 million American depositary shares (ADSs) at $11 each. That was below its projected number of shares and price range. The company had expected to offer 28.5 million ADSs at $13 to $15 each.
Trivago sold about 18.1 million ADSs. Shareholders sold roughly 8 million, down from a previous estimate of 10.4 million. After the IPO, Trivago continues to be controlled by Expedia Inc. (Nasdaq: EXPE), its biggest shareholder and customer. Expedia paid 477 million euros ($531 million) for a 62% stake in Trivago in 2012.
Trivago shares had a delayed open. Shortly before 11:00 a.m. on Friday, Trivago opened at $11.20 per share. Shares rose as much as 10.7% to $12.18 intraday before closing at $11.65. Still, that was good enough for a 7.73% first-day gain and valued the company at about $2.89 billion.
The Trivago IPO was the latest subdued showing from this year's IPO calendar. There have been 120 offerings filed in the United States so far this year. That's a 47.1% decline from last year, according to Renaissance Capital.
IPOs have raised 42% less so far in 2016 than they did in 2015, according to Thomson Reuters data. Nervous investors and poor post-IPO performances are to blame. Internet software and service companies such as Trivago have raised $450 million so far this year. That's down 41% from $762 million this time last year.
Trivago's platform allows customers to search through hotel deals gathered across a multitude of online travel sites. The company makes the bulk of its money from online travel agencies that pay for each click a customer makes on their hotel offers. It boasts an international presence with 55 localized websites and apps in 33 languages.
Over the last three years, the company has made a hard shift to mobile and now gets more than half its revenue from mobile. In the nine months ended Sept. 30, Trivago posted revenue of $425.6 million.
Now that we've reviewed the Trivago IPO, should you buy Trivago stock?