Shares
of Priceline.com Inc(NASDAQ:PCLN) slumped $109.30 or 16% to $570.50 in early
trades on Wednesday, reaching its lowest point since mid February after the company
provided a weak third quarter outlook.
How Should
Investors Trade PCLN After Today’s Slump, Get Analysis
The
company has shaved off close to a third of its market price since Tuesday. The
discount travel portal's second quarter profit and revenue rose on the back of
strong demand for international bookings but it said that the third quarter
would be weaker than expected due to the crisis in the Eurozone.
Priceline.com
gets a large portion of its business from Europe.
The
company predicted that third-quarter earnings, excluding items, would be
between $11.10 and $12.10 per share, below analysts' expectation of $12.82 per
share.
Priceline
said revenue will be 9 percent to 15 percent higher than last year's third
quarter, which suggests a range of between $1.58 billion and $1.67 billion.
That would be less than the $1.80 billion that analysts expect.
For
the June quarter the company reported earnings of $405 million or $7.85 a share
on revenues of $1.33 billion compared to earnings of $282.6 million or $5.49 a
share on revenues of $1.1 billion a year earlier.
Revenues
from international bookings rose 40 percent in the quarter while hotels
bookings sales also rose by almost the same amount. Car-rentals business saw a
rise of close to 30 percent, the company said.
Get Complete
Analysis on Online Travelling
Stocks
Travel
companies have been hit hard by the slow-down in Europe, as large parts of it
are struggling under a debt crisis, which does not look as if it will be
resolved soon. Loss of jobs, rise in unemployment rates, inflation have taken
their toll on consumers’ wallets. Travel portals have also resorted to steep
discounting in order to attract more customers and hectic competition have
eaten into their margins.
Shares
of other companies within the sector also selling off with Tripadvisor
Inc(NASDAQ:TRIP) lost 5.70% to $36.46, Expedia Inc(NASDAQ:EXPE) fell 5.40% to
$55.69 and Orbitz Worldwide, Inc.(NYSE:OWW) slumped 25%.
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