Priceline Group Inc

  In this six-part series, we will go through some of the main positions Eton Park Capital traded this past quarter Eton Park Capital Management is a multi-strategy hedge fund founded in November 2004 by former Goldman Sachs partner Eric Mindich. The firm started new positions in Family Dollar Stores (FDO) , Constellation Brands (STZ), […]

Appaloosa Management enhanced its position in American Airlines Group Inc. (AAL) last quarter that now accounts for 3.48% of Appaloosa’s total 1Q portfolio.

For 3Q16, analysts are estimating Priceline’s revenues to grow by 16.6%, which would be higher than the 12% growth the company saw in the second quarter.

Priceline’s consensus 12-month target price is $1,479.55, which indicates an 11.5% return potential.

Appaloosa Management significantly lowered its position in American Airlines (AAL) in the third quarter that ended in September 2014. The position accounts for 3.81% of the fund’s total third-quarter portfolio.

In April, Amazon had launched its new travel and hotel service, called Amazon Destinations.

Online travel industry leaders like Priceline (PCLN) and Expedia (EXPE) have a mixed relationship. They’re partners as well as competitors.

Priceline earns the majority of its revenues from the agency model, under which third parties such as hotel suppliers set the rates while Priceline earns a commission on the transaction.

Hotels make up a significant part of Ctrip’s revenues—39% of total revenues in 2Q16—similar to OTA peers Priceline, Expedia, and TripAdvisor.

Few economic releases elicit as much reaction from both the stock (IVV) and bond (BND) markets as the employment reports issued by Automatic Data Processing (ADP) and the Bureau of Labor Statistics (the BLS).

For 3Q16, TRIP’s revenue per shopper fell 12%. This is slightly better than the 24% decline seen in 1Q16 and the 19% decline seen in 2Q16.

RQPR rose 2.1% in 2015 to 1.5 euros compared to 1.4 euros in 2014. For the nine months ended in September 2016, RQPR fell 6.0%.

Officially launched in 2005, Expedia’s trivago is a known travel brand in Europe and continues to operate independently, and grow revenue via global expansion.

Priceline currently trades at a forward PE multiple of 19.5x. This is slightly lower than its average valuation of 19.9x since February 2006.

As of November 6, 2015, Priceline’s forward PE ratio stood at 21.8x, and its average valuation stands at 20x.

In Expedia’s 2Q16 earnings call in July 2016, CEO Dara Khosrowshahi said it would work with Trivago to file a Trivago IPO before the end of 2016.

OTPP added a new position in XPO Logistics Inc. (XPO) during the third quarter that ended in September. The position accounted for 0.46% of the fund’s total portfolio.

After Priceline (PCLN) released its 3Q17 results, analysts’ estimates for 2017 and 2018 were revised downwards. For the fourth quarter of 2017, sales are expected to grow 14.8% year-over-year or YoY to $2.7 billion.

A large part of Priceline’s (PCLN) growth in the past has come from acquiring smaller companies all over the world. It had to raise debt to finance some of these acquisitions.

Hotel accommodations have historically driven Priceline’s growth. During the third quarter of the year, Priceline’s global accommodation business booked 178 million room nights.

Analysts expect Priceline’s fiscal 2017 revenues to grow 16.7% YoY to $12.5 billion, which is slightly lower than the 16.5% YoY growth seen in 2016.

In 2Q17, Priceline’s (PCLN) gross bookings grew 16.4% year-over-year to $20.8 billion.

TripAdvisor’s (TRIP) average monthly unique visitors in 2Q17 rose 18.0% YoY (year-over-year) to 414.0 million users compared to 2Q16.

For 2Q17, analysts are estimating that Priceline’s (PCLN) revenue will rise 16.7% YoY to $3.0 billion, which is higher than 12.6% in 1Q17.

Priceline’s (PCLN) fiscal 2016 performance was subdued by the dollar’s appreciation. Because Priceline has a widespread international presence, it’s prone to currency fluctuation risks.

Earlier this month, the Priceline Group (PCLN) signed a deal to acquire Momondo Group. Priceline will acquire all outstanding shares of Momondo for $550 million in an all-cash deal.

For 4Q16, analysts expect Priceline’s (PCLN) revenue to rise 16.2%, less than the 18.9% growth the company saw in 3Q16.

Currently, TripAdvisor (TRIP) has a forward EV-to-EBITDA ratio of 17.9x—lower than its average of 18.5x.

Hotel reservations accounted for 61% of Expedia’s 4Q16 revenue and remain the most important contributor to Expedia’s revenues.

Trivago spends a great deal of money on its popular ads. Three of its ads rank among the top ten most-watched travel videos on YouTube for 2016.

Trivago, Expedia’s (EXPE) German hotel booking site, filed for an IPO in the US on November 14, 2016. The expected date for the Trivago IPO is Friday, December 16.

Trivago’s revenue has risen an impressive 90.0% CAGR from 2010 to 2013. As Trivago’s markets mature, the growth rate will decline, as is evident from recent trends.

Trivago combines hotel content from various sources on its platform. These hotels are then displayed to users based on their search criteria.

In its earnings call on November 23, Ctrip.com (CTRP) announced that it acquired a majority stake in Skyscanner, a metasearch engine based in Scotland, for ~$1.7 billion.

In June 2016, Qunar (QUNR) received an initial proposal from private equity firm Ocean Management.

Analysts are estimating that Qunar Cayman Islands (QUNR) will incur an EBITDA loss of $17 million in 3Q16 and $3 million in 4Q16.

According to Reuter, of the 31 analysts tracking Ctrip, 26 analysts have issued a “buy,” while three have issued a “hold,” and two have issued a “sell.”

From 2012 to 2014, Priceline Group’s (PCLN) gross bookings grew at an average of 30%. For 2015, accounting for the strong US dollar, growth was just 10%.

At 39% in 2Q16, hotels formed a significant part of Ctrip’s revenue, much like other OTA (online travel agency) players.

Expedia (EXPE) currently trades at a forward PE (price-to-earnings) multiple of 20x.

Expedia and Priceline have shown interest in China’s Ctrip.com (CTRP), with Priceline also increasing its stake.

For 2Q16, analysts are estimating Expedia’s (EXPE) EBITDA to grow by 17% to $296 million with an EBITDA margin of 13%.

Expedia’s EBITDA margins are expected to increase to 19% in 2016 and then rise to 21% in 2017. As a result, EBITDA growth is expected to increase to 42% and 27% in 2016 and 2017, respectively.

For the last year, Expedia’s gross bookings increased 28% after increasing 16% for the two years before that. For the first nine months of 2015, gross bookings have increased 20%.

TripAdvisor (TRIP) is a travel site, which means its business depends on getting loads of traffic that it can later monetize.

What are the key revenue drivers of TripAdvisor’s (TRIP) click-based advertisement revenue? We can break them down into a few key metrics.

The hotels segment is TripAdvisor’s main segment, contributing about 82% of the company’s total revenues.

OTAs have done well in the past few years. They’ve ridden on the surge in the travel industry because more people are travelling for business and leisure.

Citadel Advisors’ 4Q14 portfolio increased by 3.63% to $82.66 billion from $76.77 billion in 3Q14.

The Chicago-based Orbitz Worldwide Inc. (OWW) is a global online travel company (or OTC). It recently posted a net loss for the first quarter of 2014 although its revenue grew, driven by hotel bookings.