Trivago Shares Surge Most in Two Years on Return to Profit

(Bloomberg) -- Trivago NV shares soared the most in almost two years Wednesday after the hotel search site swung to a profit in the third quarter and raised its outlook for the year.

The Dusseldorf, Germany-based hotel booking platform has cut spending on advertising to “adapt to the changing dynamics on our marketplace,” which helped push earnings into the black.

Net income was 10.1 million euros ($11.5 million) in the three months ended Sept. 30, compared with a loss of 7.7 million euros in the same period a year earlier. Due to the reduced ad spending, revenue fell 12 percent to 253.7 million euros, Trivago said in a statement Wednesday.

The shares rose as much as 26 percent, the most since the company went public in December 2016, to $6.25 in New York. The company once known for its “Trivago Guy” ad campaign, has struggled since its market debut but is now showing signs of getting back on track. It raised its profit outlook for 2018 and said it now expects adjusted earnings before interest, tax, depreciation and amortization of between zero and a loss of 10 million euros.

Trivago pulls together prices from booking sites around the web to allow customers to find the best deal. It then collects a referral fee when users click through to secure the booking.

As of September, Trivago said it reached a “significant milestone” of being able to offer more than 1 million units of alternative accommodation, such as vacation rentals and private apartments. The company also said it was able to improve the quality of traffic that it referred to advertisers.

Trivago’s results could bode well for its peers in the weeks ahead. Other travel stocks, including Expedia Group Inc., which announces earnings Thursday, Booking Holdings Inc. and TripAdvisor Inc. also gained.

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