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How Priceline Named its Own Share Price in 2012

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The year 2012 is nearing its end, and now's a good opportunity to look at what happened throughout the year to the stocks you follow. If you know the important things that a company achieved, as well as any challenges it failed to overcome, then you can make a better decision about whether it really deserves a spot in your portfolio.

Today, I'll look at (NASDAQ: PCLN  ) . The online travel portal is famous for its name-your-own-price service but, this year, it seems like shareholders were the ones who got to pick their stock price, as the company posted amazing gains. Can Priceline make the good times last? Below, you'll find more to explain what happened with shares of this year.

Stats on


Year-to-date stock return


Market cap

$30 billion

Revenue, past 12 months

$5.06 billion

Net income, past 12 months

$1.36 billion

1-year revenue growth


1-year net income growth


CAPS rating


Source: S&P Capital IQ.

How did keep flying high in 2012?
At the beginning of 2012, Priceline continued the upward trajectory it has enjoyed for years. With blowout quarterly results, the company left analysts in the dust by extending its long streak of earnings beats. By using its international business presence, Priceline has managed to avoid some of the economic headwinds that more domestically-focused competitors have suffered in the years since the recession.

But later in the year, Priceline started losing ground. Competitors re-emerged, as Expedia (NASDAQ: EXPE  ) reinvigorated its business after spinning off its TripAdvisor business into a separate company, and even Google (NASDAQ: GOOGL  ) began to use its influence to grow its travel business.

In response, Priceline decided to buy metasearch giant Kayak (UNKNOWN: KYAK.DL  ) in order to secure its dominance in the portal space, potentially reducing its online advertising costs, and giving it the same sort of data that Google uses to cater to its customers. That move could potentially put Expedia and Orbitz Worldwide (NYSE: OWW  ) at a huge competitive disadvantage.

At 23 times earnings, Priceline shares may look like they need a discount. But with expectations of 20% revenue growth going forward and, potentially, even faster earnings growth, investors who prefer fast-growing businesses will likely pay every penny to pick up Priceline shares at a relative bargain.

Will Google challenge Priceline?
Google has its fingers in just about everything on the Internet. But with so much to worry about, is Google really a threat to Priceline? Learn more in The Motley Fool's new premium research report on Google, in which we break down the risks and potential rewards for Google investors of all of its business segments. Simply click here now to unlock your copy of this invaluable resource, and you'll receive a bonus year's worth of key updates and expert guidance as news continues to develop.

Click here to add to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Read/Post Comments (1) | Recommend This Article (2)

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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 December 28, 2012, at 9:04 AM, DennisSchaal wrote:

    Dan: When you say that Priceline's Kayak acquisition will be disadvantageous to Expedia, you neglect to mention that Expedia has agreed to take a 62% stake in European metasearch giant Trivago. This transaction could reduce Expedia's advertising costs in Europe, and is proof that Expedia won't sit back on its haunches this time around, as I wrote on Skift.

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Dan Caplinger

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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