During the call, we will run through the major takeaways from TRVG’s F-1, our analysis of the major drivers of its business model, and the implications for TRVG as a public company.
KEY POINTS OF DISCUSSION
- GROWTH ENGINE OR COST CENTER? TRVG’s elevated advertising spend is obviously a concern, but what’s more concerning is that TRVG can’t fund that ad spend on its own given its limited EBITDA/CFO, which is inclusive of EXPE-derived revenue. In short, EXPE has been propping up TRVG’s model on both ends, no telling what it would look like otherwise.
- DANGLING IN THE WIND: Now that TRVG is a public company, there will be increasing pressure to drive net revenue growth. However, TRVG is at the mercy of factors largely beyond its control, and it is walking into a more challenging operating environment as it pushes further into its competitors’ turf. In short, we view TRVG’s fundamental prospects as a quarterly coin flip.
The call should run for about 30 minutes. More detail to follow Monday morning.
Hesham Shaaban, CFA
Managing Director
@HedgeyeInternet