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

[dirque.livejournal.com]

well the key phrase would be, "net income". which is something they wouldn't have if they owned an airline ;)

[redbird]

Hmm. I wonder how complex it would be for me to sell my three shares, and how much I'd lose to commission or fees.

[achinhibitor.livejournal.com]

Well, for the $1.7 billion it would take to buy the Web site you could buy three actual airlines

Which, added together, would be worth precisely nothing...

Hey, they believed it with Akamai

[madbodger.livejournal.com]

A bunch of 'em accepted huge salaries and moved to Boston, even.

I was more skeptical, as always.

[achinhibitor.livejournal.com]

Checking the stock prices today, it looks like CAL, DAL, and FLYI together are just about worth what TZOO is.

Checking the news, I see:

DAL lost $6G over the last three years.

CAL lost $374M over the last 9 months, and is cutting wages and benefits.

FLYI "may not survive 2005" and "a high-cost [unionized] carrier trying to operate as a discounter".