By Neal Rau, Stock Traders Daily
Priceline.com Inc. (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 Q2. 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 they see Q2 EPS of $8.87-$9.45, versus the consensus of $9.58.
Despite the weak guidance and cautious words from CEO Jeffery Boyd during the Q1 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 who owns Booking.com, saw the total transaction value of mobile hotel bookings on Bookings.com grow from $1 billion in 2011 to over $3 billion in 2012.
Other travel related sites like Tripadvisor Inc. (TRIP) have supplied further evidence of the potential in mobile growth for travel. TRIP 2Q 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%. TRIP advisor made some material changes to their website recently. Before when you searched , links would appear right away from PCLN or Orbitz Worldwide, Inc. (OWW) and now 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, who shows PCLN at the top of the majority of search results. This could have been a factor in Expedia Inc. (EXPE) missing earnings and watching their stock price fall by more than 27 percent following Q2 earnings. 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. OWW also reports earning on Thursday Aug 8 (before the bell). Online travel site Travelzoo Inc. (TZOO) reported flat Q2 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 just a company specific problem.
Volatility ahead of earnings will bring trading opportunities in other stocks too. OWW also reports earnings on Thursday Aug 8 (before the bell) and Stock Traders Daily shows PCLN as neutral near term, and OWW neutral near term, but that can change after the results are announced.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: By Neal Rau for Stock Traders Daily. Neither Mr. Rau nor Stock Traders Daily receives compensation from the publicly traded companies mentioned in this article for writing this article.