What happened
Shares of Trivago (NASDAQ: TRVG) have plummeted today, down by 12% as of 11:35 a.m. EST. The decline comes as Morgan Stanley analyst Brian Nowak reiterated an equalweight (equivalent to neutral) rating while modestly increasing his price target from $2 to $2.10. The stock is now trading right around that valuation estimate.
So what
Trivago shares have been rallying strongly in recent weeks along with other travel-related companies on hopes about an end to the COVID-19 pandemic. Pharmaceutical and biotech companies have been announcing progress on three separate vaccine candidates that have demonstrated encouraging effectiveness in early trials.
Image source: Trivago.
Moderna provided an update this morning, saying that new data shows its candidate was 94% effective. The company is applying for emergency approval from the Food and Drug Administration (FDA), shortly after Pfizer and BioNTech similarly applied earlier this month.
Now what
With much uncertainty still lingering around a vaccine -- particularly for key details such as manufacturing, distribution logistics, and broader availability -- travel stocks may remain highly volatile as the industry slowly recovers and investors take profits from the recent rally. Trivago's booking platform has seen total revenue fall by 68% in the first three quarters of 2020.
In an appearance on Yahoo! Finance last week, Trivago CEO Axel Hefer warned that business travel demand may not fully recover even after the pandemic is over. Bookings in the U.S. have been rebounding recently, Hefer added, as many people traveled for the Thanksgiving holiday despite warnings from public health officials and rising cases. Bookings are still well below the levels they were a year ago.
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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool recommends Trivago. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
