Travelzoo Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of travel-discount specialist Travelzoo (Nasdaq: TZOO  ) had its bags mistakenly shipped to Timbuktu this morning, falling as much as 12.5% on fairly heavy trading volume.

So what: Just like SodaStream (Nasdaq: SODA  ) did yesterday, Travelzoo fell victim to the ire of TV personality Jim Cramer. "I'm not playing that short-squeeze game anymore," he said while pounding the "sell" button for dramatic emphasis.

Now what: Down more than 60% from 52-week highs set in April, Travelzoo shares have still more than doubled since August of 2010. Fellow Fool Rick Munarriz thinks the stock is being unfairly punished along with dining deal-maker OpenTable (Nasdaq: OPEN  ) , and both should regain their mojo when Groupon and LivingSocial hit the IPO market somewhere in the near future. Me, I'm less impressed by these services, and I don't see how they plan to generate sustainable profits without fundamentally changing their business models.

So I think Cramer and the market are giving Travelzoo a well-deserved slap today, but Rick sees a buying opportunity in these three Rule Breakers. Where do you stand? Spill the beans in the comments below.

Interested in more info on Travelzoo? Add it to your watchlist.

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Motley Fool newsletter services have recommended buying shares of Travelzoo, OpenTable, and SodaStream International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool is investors writing for investors.


Read/Post Comments (5) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 17, 2011, at 1:05 PM, mikecart1 wrote:

    TZOO = Jim Cramer's finest masterpiece to date.

  • Report this Comment On August 17, 2011, at 1:50 PM, mmoser105 wrote:

    more bears

  • Report this Comment On August 17, 2011, at 2:17 PM, jimmy4040 wrote:

    It's was simply overpriced like all growth stocks based on the effects of QE2. Whether the current valuation is sustainable will take at least another quarter to tell.

  • Report this Comment On August 18, 2011, at 7:39 AM, rodessa wrote:

    I fully agree with the comments of mmoser and jimmy :TZOO was and is always overpriced, but less than LULU as it has already lost more than 60% of fat.Lululemon has always more than 60% of fat to lose, when you have a look on its net assets of only $ 3.60 per share for a quote until $ 65.00, when the quote of an other clothing company as CHRS is less than $ 3.00 for net assets of $ 3.79 and LULU has a P.E.R. of more than 66, when the one of NIKE is only 16, so LULU is valuated more than 4 times the price of NIKE !!!.The insiders of these two companies use to sale all the shares of their stock options, mean they think their shares are overvalued ... so, have to short these shares

  • Report this Comment On August 22, 2011, at 3:00 AM, guilou0875 wrote:

    I think their new iPhone app will give tzoo a free ride to a good Q3, if you tried it you'll know what I'm talking about, especially the local deals and all, you can't beat some of the deals out there.

    If the global market is doing good by then, I'm expecting a good rebound for TZOO.

    You can't compare apples with oranges, Nike and TZOO a retail/clothing manufacturer vs a .com company...! with no similarity in the business model is not what I call an objective comparison. Or was it LULU you are comparing Nike too, the subject of the article was TZOO!!!

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