Travel deals publisher Travelzoo (Nasdaq: TZOO) made its way into Mad Money's lightning round last night.

Jim Cramer wasn't impressed.

"That last quarter was not what I wanted to see," he told the caller. "I'm not playing that short squeeze game anymore."

He then proceeded to pound the "don't buy" button for theatrical emphasis.

He's certainly right about the first part of that statement. Travelzoo posted a shockingly disappointing quarter last month. Revenue may have climbed 34% -- and earnings soared 51% -- but Wall Street was holding out for more. It's easy to see why Wall Street was spoiled, given how Travelzoo had been blowing away the pros in the past.

 

EPS

EPS Estimate

Surprise

Q1 2010

$0.15

$0.07

114%

Q2 2010

$0.20

$0.11

82%

Q3 2010

$0.22

$0.11

100%

Q4 2010

$0.23

$0.20

15%

Q1 2011

$0.37

$0.28

32%

Q2 2011

$0.30

$0.39

(23%)

Source: Earnings.com.

Travelzoo's knack for delivering guesstimate-thumping results was the main catalyst for sending shorts scrambling to cover their positions -- so is Cramer right about the second part of that statement?

I don't think so.

Another major catalyst in sending Travelzoo's stock higher since bottoming out in the preteens last summer was its move to begin marketing the same kind of prepaid vouchers for marked-down local experiences that have made Groupon and LivingSocial overnight sensations.

Investors have cooled on these bandwagon plays. Travelzoo and dining reservations specialist OpenTable (Nasdaq: OPEN) have surrendered 57% and 44% of their frothy peak values, respectively. Given the way that Groupon has been losing money, one has to wonder if it, too, has peaked.

Who are we kidding, though? The moment that Groupon and LivingSocial go public, investors will flock back to these relatively cheaper sympathy plays. Amazon.com (Nasdaq: AMZN) has bought into LivingSocial -- twice -- and Google (Nasdaq: GOOG) tried to acquire Groupon last year.

Then again, seeing how Google doesn't have a problem paying $12.5 billion for a patent-rich smartphone manufacturer, why wouldn't Google try to snap up Travelzoo or OpenTable before the sympathy plays kick in after Groupon's ballyhooed IPO?

The catalysts are certainly there for Travelzoo to send shorts covering. It only helps that the number of shares sold short has nearly tripled -- from less than 1.7 million to more than 4.4 million -- so far this year.

Oh, and what if Travelzoo resumes its analyst-besting ways in two months? If its most recent quarter was simply an exception rather than a new trend, Travelzoo shorts will be right where the longs want them.

Is Travelzoo a buy here or is there more to come on the downside? Share your thoughts in the comment box below.