Priceline 2Q - low on guidance

On Tuesday night after the market close, the world's biggest online travel company, Priceline reported their 2Q numbers. They had revenues of $3 billion up 18%, ahead of expectations and net income of $720 million up 24%, also ahead of expectations. As is the case with any company, especially fast growing tech companies with high expectations, the past period is of less importance the then next quarter. Their guidance of earnings growth of between 4% and 10% was a bit lower than the market expected resulting in the stock selling off 8%. It is still up over 30% for the last 12 months, so where you draw the line in the sand matters.

The absolute size of this business amazes me. They have a $90 billion market cap yet most people have never heard of them. Through their sites there were 170 million room nights booked over the last quarter or around 1.9 million rooms booked per night, up 21%. Lastly, their spend on getting customers to come to their sites, they spent around $1.4 billion in the last quarter on advertising and marketing (most of it going to Google) out of a total $2.06 billion in operating expenses.

As more people want to travel and feel more comfortable using the internet to design and book their trips, Priceline will continue to see the cash rolling in. A recent study shows the dominance of their business (Expedia and Priceline now own 95 percent of the Online Travel Agencies market), I don't think the researchers included Airbnb in their numbers though? A company with high growth expectations will always have a bumpy share price, hang in there and book your December holiday on Booking.com.