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.
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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.
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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%.