Priceline.com Incorporated (NASDAQ:PCLN) shares are now over $100. Unlike Expedia (EXPE), PCLN's strong European sales helped them bring in $417 million for Q3 07. The analysts are now on board, upgrading and giving the thumbs up to new price targets in the $110 range. But with the American economny in turmoil is it reasonable to assume Priceline shares can stay above $100 in 2008?
Get real America, of course not. The traders that made this stock are preparing to break it. Joesph Hargett at Schaeffers points out that data from the International Securities Exchange (ISE), some 2,189 puts were bought to open during Monday's (11/12) trading, compared to just 333 calls bought to open. The resulting single-session put/call ratio indicates that roughly 6.5 puts were purchased for every 1 call, hinting at a growing bearish contingent in the wake of Priceline's (NASDAQ:PCLN) solid fundamental performance. But that's not fair, why would traders do that after Priceline just scored a record quarter?
Because Cash Rules Everything Around Me, C.R.E.A.M. get the money, dollar, dollar bill y'all. There's money to be made fellow Masters, and now that the stock has ran with the Bulls, it's time for it to tumble with the Bears.
How soon will it happen? Then why did Priceline Director Nancy Peretsman buy 100,000 shares on Wednesday when it was $108 a share? What does she know that the public doesn't know? Call me old school, but an online travel company / Web 2.0 darling that gets hits over $100 plays on the emotional stability of investors. The general public is having a hard time that shares are going to $200, and if the price targets set by various analysts are in the $110 range, how much more can this stock climb when people are worried about the U.S. Dollar, declining real estate, and $3 a gallon gas?
I don't care what Priceline's outlook is for 2008 or what a few Wall Street analysts say about the stock, pay attention to the guys that sit in their living rooms shorting the stock. Just consider how much travel you are not going to be doing if times get even worse this coming year. If retailers like J. C. Penny (JCP) and Dollar stores (NDN) can't hit their numbers what makes you think a web 2.0 company that sells travel in cyberspace will do any better? James T. Kirk can't save the ship from sinking no matter how much of a badass he may be.
Good for Priceline, they did it, a new 7 year high for their stock, but now what?
It doesn't matter what the chart tells you, the humans that make the trades are going to cash in while they can because of fear the stock can't keep going. Fear is what is driving the market these days, the media is to blame for constantly reminding us that the U.S. dollar sucks, Barry Bonds is a liar, and 'watch out the market can crash at any minute'.
Just use common sense here, not media hype, I'm betting that concerned investors start pulling out of Priceline and shares don't get above $115. If they do, watch the short position start to build, then all it takes is one bad article on PCLN by theStreet.com, Barron's, or the WSJ and down it goes.
