In the final days of the dotcom boom, Priceline (
NASDAQ:PCLN,
Stock Forum) stock dropped in price from nearly $1000 to just $10. A lot of people took a bath.
But unlike many others of the era, Priceline (has experienced a resurgence to levels that look decidedly 90’s bubble-y, only there’s actual profits behind them.
The one-time William Shatner fronted tech stock, which cut its teeth delivering discounts on airfare and hotel bookings, has performed beautifully in the area of diversifying their products while maintaining synergy between them.
Priceline users can go for deep discounts on that site if they want to roll the dice, or rent a car at rentalcars.com, or use booking.com for hotels at regular rates if they know where they want to go, or the
newly acquired Kayak.com (
NASDAQ-GS:KYAK,
Stock Forum) if they want a flight booked quick.
All they need is a site that sells Canadian flag patches for US tourists to sew onto their luggage so they don’t get yelled at by Europeans, and they’d have the entire travel industry sewn up.
On the back of all that, profit in the most recent quarter (April to June) rose 24% to $437.3 million compared to 2012. Revenues were up 27% to $1.68 billion.
The number of rental car days booked through rentalcars.com bounced 47%. Priceline bookings are up 44% internationally.
It’s a strong, consistently thriving stock with a lot of places to grow.
It’s also an expensive one. But it’s worth jumping on.
The thing with Priceline is, it’s beginning to own an industry. It hasn’t hinged everything on the one brand, it has diversified into areas that its users have interest in. Book an airfare with Priceline, it can move you to RentalCars.com to deal with your mid-sized. If you need somewhere to stay in Karachi, it can shift you along to booking.com for that. This horizontal integration makes marketing easier, reduces the per-company costs of generating new users and leads, and it allows the company to pivot when it needs to, focusing resources on growth areas while the other points of interest take care of themselves.
This is more than a company, it’s an ecology. It has created a circular navigation for every traveler who does business online that, if they get you at any one stage, they’ve likely got you at the others too.
For comparison, think of Google (
NASDAQ:GOOG,
Stock Forum) . They’ve got you on search, so they’ll likely get you on email. And while you’re there, you’ll park some docs on their server, use their maps to see where the nearest post office is, watch a youtube video, etc etc etc. They get you in one place, they keep you in the others.
That’s what Priceline has done beautifully over the last few years, which has allowed it to get away from the deep discounts game (which let’s face it, isn’t likely a high growth industry as competitors wedge in).
Groupon (
NASDAQ-GS:GRPN,
Stock Forum) is
trying to do the same thing right now, and that’s brought them a rise in share price as they’ve talked a big game, but Groupon has yet to demonstrate that they can corner a market outside of their mailing list. They want to get into restaurant reservations, but that game is full. They want to become and ecommerce marketplace, but Amazon (
NASDAQ:AMZN,
Stock Forum) might have something to say about that.
Groupon is chasing. Priceline owns all.
So, sure, maybe you can only afford one share. Doesn’t matter, go get it. Watch it split into ten inside a year, and watch those ten march ever higher as Orbitz (
NYSE:OWW,
Stock Forum) and Expedia (
NASDAQ:EXPE,
Stock Forum) get squeezed.
So says me. Time for an IPA
- The Drunken Optimist talks a big game, but he doesn’t actually own any stock. The wife would only take it in the divorce anyway. Might as well hit the bar at 2pm and ride out the afternoon in peace. Take his advice with a grain and, as always do your own research before you actually buy something.