Despite the strong growth of the stocks on the COVID-19 vaccine reports, shares of travel platform from Trivago N.V. (TRVG) will remain volatile for a long time. The firm has lost more than 20 percent of its capitalization since the beginning of the year.
Owing to the pandemic, the tourism industry has been put on hold in several regions of the world. There has been a sharp decrease in the number of business and leisure trips. As a result, the Trivago booking platform’s overall revenue dropped by 68 percent in the first three quarters of 2020. The long-term outlook, in addition, is also disappointing. The management of the company admits that business trips after the end of the pandemic will not return to their previous volumes quickly. Trivago reported, at the same time a small resurgence in tourist interest in the United States. Despite the alerts of health care, in particular, many Americans went on trips for the past holidays.
Morgan Stanley analysts last week maintained a “Neutral” rating on Trivago shares and increased their target price marginally from $2 to $2.1. The news resulted in a decrease in the value of TRVG shares, which increased the price on the news of progress in the production of COVID 19 vaccines in November.
Severe uncertainties related to the return of tourist activity exist for the tourism industry in general and Trivago in particular. It is still hard to predict how consumers will act after mass vaccination begins and restrictions are lifted. In the tourism market, on the one hand, there is high deferred demand. On the other hand, even after the pandemic, the fear of infection will continue for millions of travelers and they may postpone trips for a longer period. Recovery could therefore be slower than expected. The limited ability of hotels and resorts, which would not be able to accommodate more guests than the rooms available, should also be taken into account. In addition, the limitations on accommodation that emerged during COVID-19 are highly likely to persist for many more quarters, which would also slow down the tourism industry’s recovery.
Trivago N.V. (TRVG) stock fell -1.37% to $2.16 on Wednesday trading, but its loss since start of the year is higher at 17.56%.