Reasons To Avoid Priceline's Stock Like The Plague

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Bluesea Research


  • Rapidly changing market can bring out several surprises.
  • Tech giants ready to pounce on this juicy niche.
  • Long-term interests of hoteliers and their expectations on justifiable commissions.
  • Never forget about Airbnb.

Priceline Group Inc (NASDAQ:PCLN) has formed a duopoly with Expedia, Inc. (NASDAQ:EXPE) in the online travel agency (or OTA) industry. Together, these two players have cornered close to 95% of the market share. In the past few years, both PCLN and EXPE have been on an acquisition spree. PCLN has acquired firms serving different travel niches including Kayak, OpenTable, Buuteeq, Hotel Ninjas, Qlika, PriceMatch, Rocketmiles and AS Digital in the past three years alone, coughing up huge amounts for them.

These acquisitions are not taking place in a vacuum, but are a bigger strategy to provide one-stop shop for all travel requirements to today's modern online/mobile-based travelers. However, there are a number of reasons why PCLN's stock must be avoided by investors.

Rapidly changing market

The $1.2 trillion travel market is undergoing major changes in the way customers are shopping, travel alternatives used, and the options available. An increasing number of customers are using mobiles to complete their travel purchases and should soon form an overwhelming percentage of all purchases.

Fig: Higher usage of mobile as a percentage of all online purchases. Source: PhoCusWright

Greater mobile usage also allows customers to test new apps and helps new ideas to gain good traction in short period of time. This is certainly not an enviable environment for a market leader who will be playing catch up with every other new app and eventually fork out huge amounts to acquire these new ideas/apps.

With the spending power increasingly moving into the hands of the millennials, there has been a noticeable change in the travel alternatives preferred by this generation. While earlier baby boomer or Gen X generation looked for a secure and comfortable well-recognized hotel, the millennial generation does not mind trying other alternatives. This has led to an explosion of new accommodation types, generally characterized as the

This article was written by

Bluesea Research profile picture
I have worked in the technology sector for over 4 years. This included working with industry stalwarts like IBM. I have done my MBA in finance and have been covering various blue chip stocks for the past 6 years. Having hands-on knowledge in the technology sector has helped me gain valuable insights into the ups and downs of this sector and predict winners and losers more accurately.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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