Tiger Global Management's positions in the fourth quarter

Part 6
Tiger Global Management's positions in the fourth quarter (Part 6 of 7)

Why Tiger Global Management increased its position in Priceline

Tiger Global and Priceline

Tiger Global started new positions in Restoration Hardware Holding (RH), Vipshop Holdings Ltd (VIPS), Gap Inc. (GPS), sold UTi Worldwide (UTIW), and increased its stakes in Priceline (PCLN) and TransDigm Group Incorporated (TDG).

Tiger Global increased its stake in the online travel giant Priceline (PCLN) by 137,000 shares to 708,000 shares last quarter. Priceline is the largest position (10.24%) in the fund’s portfolio.

PCNEnlarge GraphPriceline offers consumers accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals, and other properties) through its Booking.com, priceline.com, and Agoda.com brands. The company also offers reservations for rental cars, airline tickets, vacation packages, and cruises through the priceline.com brand in the U.S.

Priceline offers rental car reservations worldwide through rentalcars.com, and also allows consumers to easily compare airline ticket, hotel reservation, and rental car reservation information from hundreds of travel websites at once through KAYAK’s websites and mobile applications.

Priceline earns all of its gross profit from the following sources:

  • Commissions earned from facilitating reservations of accommodations, rental cars, cruises, and other travel services;
  • Transaction gross profit and customer processing fees from accommodation, rental car, and vacation package reservation services;
  • Advertising revenues primarily earned by KAYAK from sending referrals to travel service providers and OTAs, as well as from advertising placements on KAYAK’s websites and mobile apps; and
  • Global distribution system (GDS) reservation booking fees related to Name Your Own Price accommodation, rental cars, and airline ticket reservation services, and price-disclosed airline ticket and rental car reservation services.

The company saw double-digit growth earnings and revenue growth in the fourth quarter, and the results beat street estimates. Profit rose 31% to $8.85 per share from the $6.77 reported in 2012, while revenue grew 29% versus a year earlier to $1.54 billion. Bookings for the quarter increased 38.8% to $9.1 billion. Bookings for the fourth quarter increased 38.8% to $9.1 billion, especially in Priceline’s international operations, where bookings increased 41.9% to $1.3 billion. Booking.com continued to see growth, especially in Europe, that was also driven by a continued push into non-hotel accommodation, including the company’s 112,000 vacation rental properties.

PCLN hedgeEnlarge GraphThe company is guiding a non-GAAP fully diluted EPS of approximately $6.35 to $6.85 per share for 1Q 2014. For 1Q, Priceline expects total gross bookings to grow by 23% to 33% on both the U.S. dollar and local currency basis with U.S. gross bookings growing by 15% to 20%. The outlook was below analyst consensus but the company attributed the cautious outlook to a late Easter this year.

The Realist Discussions