The rise of Priceline.com Inc (NASDAQ:PCLN) shares to a price target that no other S&P 500 stock has reached before speaks to current investor tolerance for high share prices. Two factors driving share prices higher include the Federal Reserve’s quantitative easing and the improvements seen in the economy during recent months. Analyst Howard Silverblatt explains in the Wall Street Journal that companies are not engaging in as many stock splits as they have in the past. He mentions that companies tend to have a comfort level around a certain price range they want their shares to trade at. When share prices remain stable but rise above that comfort level, companies are more inclined to split the stock.
That strategy is not used as often anymore because investors are showing less concern about higher-priced stocks. Priceline.com Inc (NASDAQ:PCLN)’s CEO Jeffrey Boyd has said that the board had considered splitting the stock, but ultimately voted against it, stating that the company’s main focus is managing the business, not monitoring the stock price.
Priceline’s second quarter growth in hotel rooms and rental cars
Priceline.com Inc (NASDAQ:PCLN)’s latest results were supported by a busy travel season with steady growth in hotel rooms and rental cars. GAAP net income for the second quarter ended June 30 was $437 million, or $8.39 per diluted share, compared to $352 million, or $6.88 per diluted share in the same period last year. Non-GAAP net income for the second quarter was $508 million, up 25.6% over 2012; non-GAAP net income per diluted share was $9.70 versus last year’s $7.85.
The company’s future investments include content expansion and new market penetration and distribution to build the company’s brands. Priceline.com Inc (NASDAQ:PCLN) has five primary brands – Booking.com, priceline.com, Agoda.com, KAYAK, and rentalcars.com – and provides online travel services to over 180 countries. The company’s targets for the third quarter include a year-over-year increase in total gross travel bookings of 27% to 34%; adjusted EBITDA increase of about $990 million to $1,055 million; and GAAP net income per diluted share to range between $13.75 and $14.75.
Expedia Inc (NASDAQ:EXPE) focusing on new programs and platforms to increase revenue
For Expedia Inc (NASDAQ:EXPE), keeping up with Priceline.com Inc (NASDAQ:PCLN) has been no easy task. Room nights grew 19% year-over-year in the second quarter and revenue margin, or revenue as a percentage of gross bookings, was 12%–an increase of 30 basis points compared to the same period last year. Milestones during the second quarter were the global rollout of the Expedia Traveler Preference program, with successful conversions at major hotel chains. The brand Expedia Inc (NASDAQ:EXPE) moved to a new package platform and saw quarterly revenue rise 26%.