Why Priceline (PCLN) Will Bounce Back

I Know First  |

The Priceline Group Inc. (PCLN), is a provider of online travel and travel-related reservation and search services. Like a lot of companies, Priceline’s shares have been dropping in the early months of 2016, due to the stock market struggles. It also doesn’t help that in winter after the holidays it is generally a slow time for Priceline, and traveling in general. These reasons were what caused the company to drop 25% from last year’s high. While all these problems may seem like reasons to the stock, it actually creates a great opportunity for long-term investors.

(Source: Priceline.com)

Competition with Expedia

Priceline’s main competition is Expedia (EXPE). Priceline is used more for traveling abroad, with 88% of its revenue coming internationally. Expedia is used more for domestic travel with only 38% of the revenue coming from international travel. This plays an advantage to Priceline in the long term as the world becomes more globalized, and it will give the company more global recognition. Europe is a popular travel destination, and emerging markets in the world will only benefit Priceline. One reason why some analysts may favor Expedia is that the U.S. dollar is getting stronger. However, this should be relatively short-lived as currency exchange rates are often cyclical.

The Airbnb Threat

The other major concern for Priceline is Airbnb. Airbnb is a long-term threat for Priceline, and the hotel industry as a whole, but it also could be a great opportunity to expand. With over two million listing worldwide Airbnb is opening up the urban areas to tourists, which will increase in tourism. This gives customers more places to travel, which can only help Priceline.

CEO Darren Hutson has made moves to enter the non- hotel accommodation market. "With our worldwide team and market-leading profitability, we are expanding this low friction model more aggressively into the single-owner, single-room market as it continues to mature" he stated when discussing vacation rentals.

Since 2013, Priceline has grown their number of homes, apartments, and villas from 110,000 to over 400,000. Priceline has been able to differentiate themselves from Airbnb by not charging fees and offering booking instantly.

Priceline is still the leader in global leader in online travel services by making $10.6 billion in revenue a year. Airbnb has proven to be a disruptive force in the travel industry; however, there will always be a need for hotels. While Airbnb may be changing the way people travel, it has yet to have shown a negative impact on Priceline or Expedia. Both companies have grown over 20% in EPS over the past year. The travel industry is evolving, but Priceline is more than capable of evolving with it.

(Source: Pixabay)

Can the Growth Continue?

Over the past 10 years, Priceline has appreciated by 4900%. Its growth can only be compared to one of the FANG stocks [Facebook (FB), Amazon (AMZN), Netflix (NFLX) & Google (GOOG)], meaning that its completely revolutionized the industry it is in, and would it very difficult for it to fall dramatically.

(Source: Ycharts)

What’s impressive is that there is room for more growth, particularly in the emerging Asian market. Priceline recently invested $500 million in Ctrip, China’s leading travel agency. This gives them about 10.5% of Ctrip. The falling oil prices may also play into its favor as traveling may become cheaper. All these points add to the fact that Priceline is too big to crash, but not big enough where it can’t keep growing.

Is There A Way To Know The Future?

Being able topredict Priceline stock as many other stocks in the market has been the subject of conversation among investors for years. Investors have been looking for a tool that can provide them with the best market opportunities and allow them to have a competitive advantage in the trading waters. The I Know First Algorithm is what many of these investors have been looking for.

I Know First uses an advanced state of the art algorithm based on artificial intelligence and machine learning to foresee market performance for more than 3,000 markets including stock forecasts, world indices, commodities, interest rates, ETFs, and currencies.

The algorithm generates a forecast with a signal and a predictability indicator. The signal is the number at the center of the box. The predictability is the figure at the bottom of the box. At the top, a particular asset is identified. This format is standardized across all forecasts. The middle number indicates strength and direction, not a price target percentage gain/loss. The bottom figure, the predictability, signifies a confidence level.

As you can see above I Know First is Bullish for Priceline in the 3 months and year forecast. This is in line with most analysts’ stance, which is also bullish in their forecasts as well. The signal for the 3 months is 51.12 and the predictability 0.57 and for the 1-year forecast, the signal is 130.91 and predictability 0.78.

Previously I Know First Predicted PCLN’s stock movement in the Top 10 Stocks Forecast from February 16th. In the two-week time horizon, Priceline offered a 22.49% return.

Conclusion

You can expect Priceline’s current struggles to be short-lived. This makes it a very exciting time for investors looking for a safe long-term investment. Their growth expectancy is big and its competition will just make them stronger and more diversified within their industry.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer.

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 192.98 -0.21 -0.11 5,792,512 Trade
EXPE Expedia Group Inc. 94.97 -0.63 -0.66 2,279,408 Trade
PCLN BKNG Calfrac Well Services Ltd. n/a n/a n/a n/a
GOOG Alphabet Inc. 1,313.14 15.14 1.17 567,559 Trade
NFLX Netflix Inc. 289.56 6.45 2.28 4,991,157 Trade
AMZN Amazon.com Inc. 1,756.06 2.95 0.17 1,653,782 Trade

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