Priceline Group Inc (Nasdaq: PCLN) collapsed by more than 10 percent on Monday after the company issued fourth-quarter guidance that fell short of Wall Street’s expectations. The company’s earnings report continued a weak earnings season for online travel sites.
Priceline reported third-quarter earnings of $35.22 per share on revenue of $4.43 billion. Both numbers topped analyst expectations of $34.25 and $4.34 billion, respectively.
Gross bookings increased 18 percent to $21.8 billion, also beating analyst estimates of $21.4 billion. Room nights were up 18.6 percent, rental car days were up 5.5 percent and airline ticket sales were down 11.8 percent.
But looking ahead to the fourth quarter, Priceline guided for EPS of between $13.40 and $14, well short of analyst expectations of $15.56.
Priceline’s struggles aren’t unique in the online travel space this earnings season. Tripadvisor (TRIP) shares sank 9 percent Monday after the company reported disappointing third-quarter revenue. Last week, Expedia (EXPE) stock was hammered when it reported both revenue and earnings misses.
Hurricanes Irma and Harvey negatively impacted travel in the third quarter, but intense competition is the major online travel headwind at the moment. One recent report from Skift found that the Alphabet subsidiary Google’s (GOOG, GOOGL) “Book on Google” travel business may now be even larger than Priceline’s travel business. Airbnb is also on pace to increase its total bookings by 25 percent to over 100 million this year.
Heartland Financial chief investment officer Nancy Tengler says there may simply be too many players in the game.
“I think we need to see some consolidation in this space,” Tengler said on CNBC. “It’s more competitive and there’s a lack of branding. People are not seeing where to go, and they just shop price.”
Despite a lackluster quarter for online travel investors, Oppenheimer analysts recently chose…
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