Will Priceline get a boost from mobile?
Can the online travel company manage to meet expectations when it reports Thursday?
By Neal Rau, Stock Traders Daily
Priceline.com (PCLN) is set to report earnings after the bell on Thursday August 8. Although the company beat first quarter earnings forecasts, the shares fell in after-hours trading on weak guidance for second quarter. Priceline CEO Jeffery Boyd said in a statement, "We continue to see economic uncertainty in certain regions, and competition in the online travel sector remains intense." PCLN said it sees second quarter earnings per share of $8.87-$9.45, versus the consensus of $9.58
Despite the weak guidance and cautious words from the CEO during the first quarter conference call in May, the stock managed to trade up sharply the day after earnings and rally more than 10% over the next week.
PCLN also announced the completion of the merger with Kayak on May 21. The acquisition moved to bolster Priceline's travel research and advertising capabilities. Even more important might be the mobile presence and popularity of the Kayak mobile travel App; Kayak was the #1 mobile travel app download by Android users. PCLN, which owns Booking.com, saw the total transaction value of mobile hotel bookings on Bookings.com grow from $1 billion in 2011 to more than $3 billion in 2012.
Other travel related sites like TripAdvisor (TRIP) have supplied further evidence of the potential in mobile growth for travel. TRIP's second quarter earnings showed that unique monthly visits increased by more than 50% to more than 220 million. Of those 220 million visits, approximately 80 million came from mobile devices, which is an increase of more than 200%.
TripAdvisor made some material changes to its website recently. Before the changes, searches would result in links from PCLN, or Orbitz Worldwide (OWW). Now, after the changes, the website is designed to keep you on the site longer and allow users to click less to get to where they want to book their travel.
Priceline has invested heavily in ads on various travel websites, including TRIP, which shows PCLN at the top of the majority of search results. This could have been a factor in Expedia (EXPE) missing earnings and the stock price fall by more than 27% following second quarter results. PCLN may have taken advantage of the surge in mobile and could be the beneficiary of the shortfall in EXPE's earnings.
Volatility ahead of earnings will bring trading opportunities in PCLN and in other stocks too. OWW also reports earning on Thursday, Aug 8 (before the bell). Online travel site Travelzoo (TZOO) reported flat second quarter earnings on July 18. Stock Traders Daily provides trading reports for PCLN and other online travel stocks. Investors will find out on Thursday when PCLN and OWW report if the disappointing earnings posted by EXPE were sector related or company specific.
Stock Traders Daily shows PCLN and OWW as "neutral" near term, but that can change after the results are announced.
MORE ON MSN MONEY
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.