Not in Fairfield County?
August 18, 2019Cart


by Fairfield County Business Journal

Priceline’s third-quarter profit rises, stock value drops

Third-quarter gross travel bookings for The Priceline Group Inc. were $21.8 billion, an 18 percent increase from the previous third quarter, while gross profit was $4.4 billion, a 22 percent increase from the prior year. Net income in the third quarter was $1.7 billion, a 240 percent increase versus the prior year, which included a $941 million goodwill impairment charge.

Glenn Fogel

The Norwalk online travel services company reported adjusted earnings of $35.22 per share, beating the consensus estimate of $34.31. However, it projected adjusted earnings in the fourth quarter to be in the range of $13.40 to $14, considerably below the consensus estimate of $15.62.

The company’s division had approximately 1.5 million properties on its platform, up 41 percent over last year.

“This represents 26.9 million potentially bookable rooms, which we believe to be the largest, and most diverse, selection of instantly bookable accommodations in the world,”  Priceline CEO Glenn Fogel said.

With hotels becoming more adept at incentivizing guests to book directly, and companies such as Airbnb providing increasing competition for online booking agencies like Priceline, the company responded with conservative fourth-quarter guidance – which sent its stock value plummeting soon afterward.

“Priceline has entered a period of increased spend, combined with a shift in customer acquisition strategy (towards more direct traffic flow),” wrote Piper Jaffray analyst Michael Olson in a note to clients. ­­”While this is likely the right long-term strategy to drive higher repeat traffic rates and an improving overall advertising return on investment, we expect some degree of ongoing negative impact into 2018.”

The company now expects fourth-quarter room-night growth to 8 to 13 percent and earnings per share 10 percent below Wall Street consensus, Olson wrote.