Priceline, Orbitz Coming In for a Hard Landing
Shares of Priceline and Orbitz are in a free fall after both companies provided disappointing outlooks as Europeans cut back their travel plans.
Priceline’s stock was tanking this morning, down more than $100 a share, representing more than 16 percent of the company’s market value. In mid-session trading, the stock was at $567 a share, still safely above its 52-week low of $411.
Orbitz shares were trading around $3.48, down only $1.18 but representing a 25 percent drop.
Both companies said they are feeling a chill from Europe as currency fluctuations and economic troubles continue to plague the region.
This morning, Orbitz reported lower than expected second-quarter results and cut its forecast for the year. Gross bookings for the Chicago travel site declined 1 percent year over year to $2.97 billion. The company said net income was also cut in half to $4.6 million.
Yesterday, Priceline said it, too, was not able to negotiate the headwinds. Where’s William Shatner when you really need him?
The Norwalk, Conn.-based company, which operates as Booking.com in Europe, said it believes Europe’s economic conditions will further deteriorate and that it will likely impact the company’s future results. Priceline is now forecasting that revenue will fall between $1.58 billion and $1.67 billion in the third quarter, short of analysts expectations for sales of $1.8 billion.
Citi’s Mark Mahaney said there are three reasons why Priceline stock is down so drastically: It missed its international bookings estimates for the first time since 2009; its third-quarter guidances suggests a decline in international bookings; and its bookings in the U.S. underperformed compared to Expedia for the second consecutive quarter.
Comparatively, other travel stocks were holding up fairly well today.
Kayak, which went public last month, was down 3 percent to trade at $31.20 a share — a healthy margin above its IPO price of $26 a share. TripAdvisor was off 5.4 percent to trade at $36.59; its former parent company, Expedia, was similarly down 5.5 percent to $55.66 a share.