Talk of a pending initial public offering of Expedia‘s (NASDAQ: EXPE) majority-owned Trivago travel site initiated with the company’s second-quarter earnings release in late July. At the time, Expedia said it had agreed to explore the feasibility of a Trivago IPO, adding that should the decision be made to take the site public, it didn’t intend to sell any of its shares. Expedia owns 61.6% of Trivago.
It appears those tentative plans are moving forward, according to sources close to the matter. Though Expedia, at least initially, won’t be selling any of its stake in Trivago, if analyst valuations prove anywhere close to accurate, it stands to make a significant profit, at least on paper. According to industry pundits, a standalone Trivago would be worth an estimated $5 billion.
Expedia acquired its majority position in Trivago for $628 million just four years ago, and it’s now worth approximately $3 billion assuming those valuations prove accurate. The site generated $201 million in revenue last quarter, good for a 41% year-over-year improvement. It was Trivago’s strong European presence which propelled Expedia’s purchase, and the move continues to pay dividends.
In addition to Trivago’s impressive stand-alone revenue jump last quarter, it also played a key role in driving a 24% year-over-year sales jump in Expedia’s international segment. Expedia said Trivago’s strong ad platform also contributed to the 42% increase in advertising and marketing revenue it enjoyed in the second quarter.
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Tim Brugger has no position in any stocks mentioned.
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