timwest
Short

Priceline PCLN hysterical valuation

NASDAQ:PCLN   PRICELINE GRP INC
467 8 11
Priceline PCLN             hysterical valuation

No offense here to Priceline, but 10 times sales is "insanity". Insanity because historically speaking, your odds of making money are rather slim. Maybe you have a 10% chance of making money, big money. But you have a 90% chance, in my opinion, I'd have to update my record books to get an exact analysis, of having a zero return or slightly negative return for the next 10 years.

Granted, PCLN             has rising margins and steadily growing sales and that is impressive. So, yes, over time PCLN             could grow into its valuation and that is what the market is telling us to expect.

This is a challenge to all of us to research the future returns (subsequent 10-year holding period) once a company has at least a billion in revenues and hits 10 times sales in valuation. In other words, if the company is worth more than 10 billion and has 1 billion in sales.

I don't know what or when people will realize the insanity of this valuation level, but I hope none of us get hurt by it. It's time to look elsewhere for returns if you own PCLN             . I'd strongly suggest selling, hedging, or selling long term call options at-the-money to reap as much in the door now. Try January 2016 expiration for 1350 strike or 1300 strike call options and generate at least 20% cash in your pocket now to hedge against downdrafts.

Look for technicals to roll over to sell short for those nimble traders. This stock should provide some excellent trading opportunities this year.

Tim 11:45AM 2/28/2014 1356.50 last
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Excellent use of the fundamental data. Priceline stock has always amazed me, attempted two shorts on this one over the past 5 years. One worked so-so, the other handed me a tough loss. So it's once bitten, twice shy for me.
+1 Reply
nmreich1
2 years ago
I agree with your analysis. Markets tend to sway between oversold and overbought - this stock is clearly extremely overbought. Also, check TSLA for another good opportunity to short.
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timwest PRO nmreich1
2 years ago
Check all of my posts on Tesla :-)
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