Trivago Climbs in Debut After Pricing IPO Below Rangeby and
Shares jump 7.6 percent to $11.83 after pricing at $11 each
Expedia will maintain control of the publicly listed company
Trivago, the German-based travel site majority-owned by Expedia Inc., climbed in its debut after the company priced its U.S. initial public offering below the marketed range.
The stock jumped 7.6 percent to $11.83 at 12:12 p.m. in New York. The company has a market value of about $2.8 billion at that price, based on the total number of shares outstanding after the offering in the deal prospectus.
“We’ll see where the stock is trading in a year or five years, that’s what’s important,” Chief Executive Officer Rolf Schroemgens said in an interview on Bloomberg TV. “Today, I’m just happy we’re here.”
The company and existing shareholders sold 26.1 million American depositary receipts for $11 each, according to a statement Thursday, after offering 28.5 million for $13 to $15. The ADRs are listed on the Nasdaq Stock Market under the symbol TRVG.
Trivago has had a winning combination of TV ads and search engine marketing, boosting revenue to six times what it was when Expedia bought a majority stake in 2012. But most of that is being plowed right back into more advertising, keeping profits low.
Revenue increased 59 percent in 2015 to 493.1 million euros ($535.5 million). Of the $657.4 million Trivago has pulled in so far this year, it spent $604.7 million on marketing. Adjusted earnings, excluding taxes and one-time items, were $18.3 million through September.
Trivago has two share classes. The Class A shares were sold to the public, according to the filing. Class B shares will be held solely by Expedia, which didn’t plan to sell its stake.
The business is a metasearch website, which means it scours the internet for hotel listings, organizes them by price and location, and gets a referral fee when users click through to the original listings. It’s roughly the same model employed by Kayak.com, Skyscanner Ltd. and TripAdvisor Inc.
Trivago focuses solely on hotels -- a decision the company made early on and has stuck with. Hotels are the biggest revenue-generating segment in travel.
JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley led the offering.