Travelzoo May Be In Need of a New Zookeeper <!– –> <!– –>
The pump and dump
Last year, I was kicking myself for missing a huge move in shares of Travelzoo (ticker: TZOO). I say this because the chart pattern that was associated with the power move in TZOO shares is one that I always look for and has an accuracy success rate of 88%. The shares came out of a 30 month consolidation formation and ran from $20 to over $100 inside a 12 month time frame. It wasn’t long before I began to notice Travelzoo being touted by the CEO, Christopher Loughlin. This is where it gets interesting. While Mr. Loughlin was pumping shares of the stock on Mad Money and CNBC (at $80), Ralph Bartel (Director and Founder of Travelzoo) was dumping his shares as fast as he could. The good doctor (PHD in Communications) unloaded 2.5 million shares at an average price of $76.55. Today, TZOO shares are down again and trading below $18. The company is sporting a market capitalization just over $286 million, which in my opinion is pathetic considering the doc scalped over $190 million on the sale of his shares. There are numerous questions on the table; was this just unbelievable timing? Was Mr. Loughlin used as a puppet to pump shares before the dump? What about the mom’s and pop’s out there that were ‘buying into the story’; essentially enabling Dr. Bartel to unload his shares just before their own nest egg took a 76% beat down. Go Big Now! Make Money Online Make Money Like A Pirate! Make Money Fast With Go Big Coach Kristen The Shockingly Simple System That Makes Howe Me At Least $1,000 Per Month Without A... Mismanaged The TZOO party in 2011 focused on explosive growth in North America, exceeding 23 million subscribers, had initial success in Asia and Australia, and even posted very impressive growth in Europe. Fast forward to now – the company is now expecting a significant year-over-year loss. Analysts had been expecting revenue of $39.2 million, TZOO guided $35-$35.5 million.
Analysts had been expecting EPS of $0.29 and TZOO guided $0.20-$0.22. Sorry gang, these misses are huge and are in no way indicative of a growth company. You miss on Wall Street and you pay the penalty. The high growth price to earnings ratio (PE) disappears, short sellers take over and share values plummet. For the time being, due to the lack of barriers to entry in this space, and Travelzooâ€™s apparent loss of momentum, it looks as though the USS TZOO has just crashed into an iceberg called reality. In my opinion the company should hire a merger and acquisition banker (M A) and stop spreading rumors that they are doing so. Management needs to step away from pumping the company and spend more time on revamping the company. There is a solid platform in place that has the potential to propel TZOO as a major player. However given the current direction of management, I donâ€™t see that happening anytime soon. Perhaps it is time for a new zookeeper at TZOO. Seeking Alpha
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Published on Oct 22, 2012