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The Priceline Group Inc. Message Board

  • iahphx iahphx May 9, 2012 11:08 AM Flag

    PCLN's inevitable decline

    I have no idea what will happen after market close today. Given the behavior of the investment houses, they seem to believe they have some information suggesting that PCLN will have another very good quarter. We'll see if they're right.

    Within the next year, however, this stock is almost certain to be toast. The reasons are obvious to anyone not drinking the kool-aid.

    Priceline is essentially a European hotel booking company. They are basically a failure in the USA. They make money in Europe offering a fairly unique service that allows average leisure travellers to more easily book rooms in small European hotels. That seems to be the only competitive advantage they have over any of their competitors -- who generally have more breadth (like they sell airline tickets) and better websites.

    There is ZERO reason to believe this model will translate to other regions of the world, just as they have been relatively unsuccessful in the USA. Their major presence in Asia is in Thailand. Yes, Thailand.

    Based on these prospects, anyone who TRULY thinks this is a business worth more than most of the world's other travel companies COMBINED needs their head examined. It is a momentum play that's been seized by the fast money, no-interest crowd. This will become increasingly obvious in the months to come, regardless of what happens today. Indeed, if we get a spike today on some supposed "good news," I'll be inclined to short the stock in the coming weeks.

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    • maybe long term, they only need a revenue and EPS beat and upped guidance to skyrocket tonight. I doubt i will even invest in PCLN again, never was in before yesterday, possibly never in again. I came in looking to short since I short GRPN, NFLX, OPEN and everyone mentions PCLN as another one, I eventually bought calls based on what I calcd the P&L and Guidace should be.

    • "Clearly, you don't travel much. Attempting to get the domestic market for Japanese and Chinese Travel is incredibly difficult due to language, customs and culture. It would take years and years."

      I have been to both countries a half dozen times in recent years. I am also a longtime investor in the travel industry. For better or worse (and, with PCLN, it would be "for worse" if you were short) I know the travel industry very well.

      You want to compete in China, you probably need a partner. Hmmm. Expedia owns a controlling interest in elong, one of China's largest online travel agencies. Priceline owns nothing. They plan to compete from Thailand! They did previously invest in a Hong Kong outfit, but that doesn't seem to have amounted to much.

      To match PCLN's valuation to their opportunity, they'd have to have almost limitless opportunity. Rather, they have many roadblocks and competitors. The market is completely clueless about this. That will prove disasterous to this stock's long term performance.

    • Good message, but don't forget PCLN is successfully expanding in Asia. Regarding their total valuation, focus on their PE, which makes their stk price correct. If however their grow slows down then the PE would need to come down and the stk price would follow.

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