Should I stay or should I go now ... I have a Oct 650-550 put spread on... I watched PCLN run from 709>765 and when it dropped down I thought ok I'm good ... then it RAN again to 765 which does not leave a good feeling in the stomach. So are the machines finally going to let this fall or will it run up again ? I've got about a 35% gain on my put spread.... Decisions decisions ~
Looks like a Buying Opportunity to me. The news isn't really bad, and there's still plenty of Earnings there. PCLN has had lots of these dips before and the Uptrend is still in place. BUY The Pullback! GO LONG!! SAN FRANCISCO (MarketWatch) -- Priceline.com Inc. PCLN -5.26% saw its shares fall nearly 5% to $683.60 on Thursday morning after the online travel firm posted a strong earnings gain for the first quarter but issued a forecast for the current period that was below expectations. For the second quarter, Priceline forecast earnings per share between $7.20 and $7.40, with revenue expected to grow between 18% and 23%. Analysts had been expecting earnigs of $7.37 on a 26% revenue gain. Doug Anmuth of J.P. Morgan wrote in a note to clients that "we believe guidance may be conservative as it accounts for shifting macro and geo-political dynamics in Europe." He maintained an outperform rating on the stock.
No concerns about PCLN being worth more then all the US Airline stocks combined ? No concern about a company with a 35B dollar market cap and no moat ? And many other companies doing the same thing ? No concerns about PCLN doing 60% of their revenues in EU and Europe falling apart ?
All good points, and some of those concerns have certainly been factored into this pullback. But it's had other price drops during the last 3 years when times were rough, and the uptrend continued. The 30% of the population in America and Europe who can still afford to Travel will also probably keep on using PCLN. But before buying I'd wait a bit longer to be sure this pullback is over. It could still fall to the 625-600 area easy enough. Would like to go long in the low 600s, but will eat the loss if it falls below Support at 550.
I would hardly say 680 is a pullback - 450 now that would be a pullback. I cashed out and put all my money into REITS which were paying 15% before dotcom bubble ... some stocks now remind me of 1999 with stocks trading at 10x revenues/book ... Sure PCLN has great margins now but how about 2 years from now ?
On April 9th PCLN hit a High of 774.96. Now we're at 675.39 (-12.85%). Pick a word: "Dip" "Pullback" "Retracement" "Correction" But 450? The only word I have for that is: "Collapse"!! Still watching.... We'll see what happens in the 650-625 area. That could hold as support, being above the gap-up from 600 on 02/28.
Yes, I really have a 100 point spread - is that really any different from a 10$ spread (65-55) on a 70$ stock ? 450 doesn't even break support or go below the last 12 month lows. In (last 12 months) 2011 PCLN was 450-ish in late June, Late August, end of September, and in December. Is PCLN a company you see doing the same growth and having the same margins 3 years from now ? Momentum stocks work until they don't ... and then they really don't work.
Still working on the math for that Spread.... PCLN hasn't had an ideal 45 degree angle 3 year Uptrend, that's for sure. A streak up, then a 9 month Channel, then another rally and another 9 months sideways. One could argue the 550 Resistance area from last Summer should now act as Support. Time will tell, if PCLN falls that far. Has it begun a multi-month Trading Range in the 600s-700s, after the Upleg from 450? Or is the game over and PCLN is ready to drop 300-400 points into the abyss?