The IPO Buzz: Traveling With Trivago

Just in time for the hectic holiday travel season, Trivago (TRVG – proposed) is the marquee name on the IPO Calendar. The company, known for its ad slogan “Never Pay Full Price on Hotels,” is set to go public at the end of the week. Wall Street is paying attention because the online travel sector is hot – reflected by a 22.2 percent jump this year in the stock of Priceline. (Perhaps it doesn’t hurt that Holiday Inn is playing on Broadway, giving a new generation of theater-goers a chance to fall in love with “I’m Dreaming of a White Christmas” and other classics from the 1942 film with Bing Crosby and Fred Astaire.)

Based in Dusseldorf, Germany, Trivago aims to dominate online search for hotels. It is the leading brand of travel B.V.  Bankers plan to offer 28.5 million American Depositary Shares (ADSs) of travel B.V. (Trivago N.V.) in the price range of $13 to $15 each on Thursday night, the 15th, to start trading Friday morning, Dec. 16th, on the NASDAQ.  The IPO is likely to raise about $399.4 million, based on the mid-point of that price range.

Trivago’s advertiser base includes online travel agents, hotel chains and independent hotels. The Priceline Group Inc. provided 43 percent of Trivago’s total revenue for the nine months ended Sept. 30, 2016, up from 27 percent during the same period in 2015, according to the prospectus. Majority shareholder Expedia, a Priceline rival, will still control Trivago after the IPO, the prospectus says.

Priceline, of course, has come a long way since it went public in March 1999 during the height of the dot-com boom. The IPO was priced at $16 a share and closed at $69 on its first day of trading. Fast forward to late 2016: Priceline’s stock closed on Friday, Dec. 9, 2016, on NASDAQ at $1,557.98 – up 22.2 percent from its close at $1,274.95 on Dec. 31, 2015.

Trivago isn’t the only IPO game in town this week. WildHorse Resource Development (WRD – proposed), an oil and gas exploration company, is the other true-blue IPO on this week’s calendar. Rounding out the list is a small-cap offering by Energy Hunter Resources (EHR – proposed) and a public offering of ADSs by TiGenix NV (TIG – proposed), a Belgian biopharma company whose stock is traded on Euronext Brussels.

This week’s IPO volume is estimated at just over $1 billion. That production is coming on the heels of last week’s IPO traffic of about $1.2 billion.

Warm winds from the U.S. stock market continued to blow last week, with the three major U.S. stock indexes closing on Friday, Dec. 9, 2016, at record highs. The NASDAQ Composite Index, the barometer of the IPO market, ended Friday’s session at a record of 5,444.50 – UP 8.7 percent from its close at 5,007.41 at the end of 2015.

WildHorse at the Gate

From deep in the heart of Texas comes WildHorse Resource Development, an oil and gas exploration and production company with assets concentrated in Southeastern Texas and Northern Louisiana.  Interest in this IPO is being driven by the rebound in oil prices recently to around $52 a barrel from last year’s slide, when oil slipped below $40 a barrel at the end of 2015.

U.S. crude oil futures prices hit their highest level in more than a year last week – closing at $51.79 on Monday, Dec. 5th – after the Organization of Petroleum Exporting Countries (OPEC) agreed to cut production.   The Dow Jones U.S. Oil & Gas Index is up 24.6 percent for the year to date.

WildHorse Resource Development, based in Houston, is scheduled to price its IPO on Tuesday night, Dec. 13th, to start trading Wednesday, the 14th, on the New York Stock Exchange. Bankers plan to offer 27.5 million shares at $19 to $21 each. The IPO’s volume is estimated at $550 million.

WildHorse is active in the Eagle Ford Shale area, an oil and gas formation that extends from Mexico to the eastern edge of Southeastern Texas, and in the Cotton Valley Formation, a natural gas play in Northern Louisiana, the prospectus says.

Clean Slate Ahead

Looking ahead to the week of Dec. 19th, the IPO Calendar is clean and green. No IPOs have been scheduled for the week before Christmas.  It’s typical for this time of year. The IPO market tends to slow down in the last half of December.

Nevertheless, it’s worth repeating that this could change when the U.S. Securities and Exchange Commission’s filing window opens on Monday morning. After all, this is Wall Street and anything can happen.

Stay tuned.

Disclosure: Neither the author nor anyone else on the staff has a position in any stocks mentioned, nor do we trade or invest in IPOs. The author and staff do not issue advice, recommendations or opinion