Why Orbitz Shares Tumbled
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Orbitz Worldwide were losing altitude today, falling by as much as 24% after the company released third-quarter earnings this morning.
So what: The always-volatile online travel merchant said earnings per share fell to $0.11 from $0.14 a year ago, missing estimates of $0.13 as SG&A and marketing costs increased. Revenue jumped 11% in the quarter to $220.9 million, matching expectations, but investors were turned off by lower full-year revenue guidance. The company now expects just $840 million in sales versus the consensus of $849 million. There were some bright spots for Orbitz. While air-ticketing revenue fell 4%, the hotel side of the business improved as room nights booked grew 22% and sales from hotel and vacation packages jumped 50%. Stand-alone hotel sales are now the company's No. 1 segment.
Now what: Orbitz shares have fluctuated from $2.08 to $13.26, so it's probably not worth losing sleep over today's double-digit drop. Investors should be more concerned that the company does little to differentiate itself from competitors such as Expedia or priceline.com, making it a bit player in what's largely a commodity industry. Orbitz's increased investments in hotels may pay off, but it's hard to see how the company can find a way to separate from the herd.
Don't get mad, get even
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.
The article Why Orbitz Shares Tumbled originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends priceline.com. The Motley Fool owns shares of priceline.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.