Market Overview

Investors Not Thrilled with HomeAway's Top Rural Acquisition


Online vacation rental company HomeAway (NASDAQ: AWAY) announced earlier today that it will acquire a Spanish holiday cottage rental site, Top Rural. The purchase price was not disclosed.

According to HomeAway's statement, “The acquisition of Toprural broadens HomeAway's reach within the European market. It also adds inventory that appeals to a desirable European traveler segment that seeks long weekend getaways to small towns or countryside destinations as an escape from the city.”

Top Rural operates in eight different languages including French, English, and Dutch, which gives the site access to a broad customer base in Europe. Investors have not been thrilled with the news though, as the stock closed down approximately 6% on the session.

Susquehanna analyst Herman Leung, who has a Positive rating on the stock, told Benzinga that the Top Rural acquisition should be positive news for HomeAway. According to Leung, it gives HomeAway a good presence in Spain. Leung also believes that HomeAway will most likely be able to monetize the Top Rural site.

When asked about HomeAway's international expansion in the future, Leung brings up Europe and Australia as potential regions where the company could expand.

Benzinga also contacted HomeAway to inquire about the future M&A plans as a part of the company's growth strategy, but the company's spokesperson was not available to respond.

Investors who believe that today's acquisition is in fact going to boost HomeAway's growth may want to take advantage of the sell-off and buy some shares. However, the stock is currently trading below its 50-day and 20-day moving averages, which are key technical levels.

You can follow me on Twitter @TuomoKallio.

Analyst disclosure: SFG is a market maker in the securities of HomeAway (AWAY)

Posted-In: Herman Leung HomeawayLong Ideas News Short Ideas M&A Movers Trading Ideas


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