Shares of Trivago N.V. (NASDAQ: TRVG) were moving higher today, though there was no obvious cause for the hotel-booking specialist's gains. One possibility is a short squeeze, which happens when a heavily shorted stock jumps on short-seller fears that the stock is rebounding, but there was no clear reason for such action. The stock closed up 13.8%.
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Shares of Trivago were heavily traded today as volume was at 3 million at the close of the session compared to a recent average of just 653,000 shares traded daily. Such heavy trading is usually a sign of a short squeeze. Only 2.4% of shares outstanding are sold short, but nearly a third of the float, or the shares available for public trading, is sold short, indicating that a significant number of investors are betting against the stock.
Considering Trivago's recent troubles, including a dramatic slowdown in revenue growth as bidding patterns among its partners shifted, it's not surprising that investors think it will keep falling, especially as the stock recently hit an all-time low.
The rest of the online travel agency sector, including Booking Holdings, Expedia, and TripAdvisor, was quiet, adding another reason to believe Trivago's gains today were the result of a short squeeze. Though the double-digit jump is good news for shareholders, the company's fundamentals will have to change significantly in order for the stock to return to its former heights.
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