Another one from the Five Dumbest Things on Wall Street this week.

[randomness]

Friday's article had this as item 4:

"Shares of online publisher Travelzoo (TZOO:NYSE) closed above $100 for the first time Tuesday, and they traded even higher on Wednesday."

...

"Thus, Travelzoo -- a company that had net income of $4.4 million on $23.2 million in sales in the first nine months of the year -- is trading at about 250 times estimated 2004 earnings. It enjoys a market capitalization of $1.7 billion.

"How crazy is that? Well, for the $1.7 billion it would take to buy the Web site -- which lists cheap airfares and other travel bargains -- you could buy three actual airlines themselves.

"Yes, you'd have enough money to buy Continental (CAL:NYSE), Delta (DAL:NYSE) and Independence (FLYI:Nasdaq). Not only that, you'd have enough money left over -- at least $100 million -- to pay Bill Gates an hourly wage to make your own travel-bargain Web site from scratch.

"Frankly, doing that makes about as much sense as paying 250 times earnings for anything."

(Note from me: TZOO did close below $100 today, at $98.89, after a pullback on Thursday and Friday. The company's market cap is still about a billion and a half dollars.)

Comments

[rfrancis]

Yeah, I was wondering about those shares they gave away way back when they were starting (I have a few too, in theory.) I've always written them off as pointless and worthless.

-R

[r-ness.livejournal.com]

If you guys find out, let me know, because I have a couple myself.

[rfrancis]

Well, okay. I went to Travelzoo's site and found their Investor Relations page, and had it sent me my account information by giving it the email address of record (I still get their newsletter, so it was easy to find out which address they had.) I logged on using that and discovered that I have 8 common shares in their account. Basically, if I want to do something with them, it appears I would go to the page to request a stock certificate, print the form, fill it out, send it to them, and they'd send me a physical stock certificate (instead of being "book-entry" which is what my shares are now) and I could send that to my broker to get it into my account there, then deal with it however I want, I guess. What does that mean the end result might be? Dunno. This is way out of my field. But that's what I gather so far.

-R