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 EXPE is effectively funding TRVG’s ad budget given that it buys a large portion of TRVG’s inventory, which may have debatable demand elsewhere. 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.
Hesham Shaaban, CFA
Managing Director
@HedgeyeInternet