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Priceline now worth $100B

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Re: Priceline now worth $100B

#161

Post by richthegeek »

adventured wrote: post #103
trafficlight wrote: post #88

Earlier quoted context omitted.

I have a hard time with the idea that SpaceX sits somewhere around $12B and Tesla around $50B (with most people arguing even that is absurd). So to value Priceline at $100B is insanity.

Priceline has generated $7 billion in net income the prior three fiscal years combined. They may be overvalued, however they blatantly are providing an extremely valuable service. And if it were easy to replace or compete with (ie something of low actual value), the airlines etc would have already cut out Priceline and would keep the $2+ billion in annual profit for themselves (they've tried and failed repeatedly to…

So at least in traditional accounting their valuation would be 10 * 7/3 = $23B

But then again PE on stocks seem to have been getting higher and higher in this latest tech boom (bubble?).

Re: Priceline now worth $100B

#162

Post by bira »

saimiam wrote: post #117
tehwebguy wrote: post #31

Earlier quoted context omitted.

From a different perspective Priceline is an outsourced, commission-only marketing & sales team that every airline, hotel and rental car company may participate in freely.

Just yesterday, someone on HN was moaning that they wished they could just hire someone to do their marketing for them!

What thread, if I may ask? Biz opportunity right there.

Re: Priceline now worth $100B

#163

Post by fitchjo »

anigbrowl wrote: post #139
hayksaakian wrote: post #46

Earlier quoted context omitted.

If you work backwards from what generates revenue (purchases) in the travel industry you'll find that marketing drives decision making more than the underlying airplanes, trains etc. Physical assets are a known quantity for better and for worse. They intrinsically depreciate. On the other hand, Brands grow over time from word of mouth and other marketing, so long as their final product is at least average.

Brands have no inherent value though; they're the consumer equivalent of religious icons. They cease to have meaning if they're not kept alive by advertising and can be destroyed by a single screw up or undermined by a clever emme. Marketing people sell value, they don't create it.

In the eyes of who?

To the company and its owners, if my brand allows me to sell an equivalent widget for a higher margin, how is that not value? Just because value can be created or destroyed by a single action doesn't mean that value is somehow less valuable.

To the user, if I derive greater pleasure because I believe I have bought a more valuable product (attributable only to the brand), just because there is an equivalent widget out there, does that somehow discount my pleasure?

What even, is the basis on which, in this hypothetical scenario, we have determined the widgets are equivalent? Surely there is some subjectivity that would be driven by people's opinions, influenced directly or indirectly by brands, in that decision.

Re: Priceline now worth $100B

#164

Post by sbarre »

dragontamer wrote: post #138
shimon wrote: post #82

Earlier quoted context omitted.

Right. Another way of highlighting the absurdity of dismissing things like Priceline as non-assets is to look at the history of computing. Microsoft commoditized PC hardware, and became tremendously valuable selling the dominant OS. Google is doing the same thing with Android. Is Windows or Android not an asset? Is it not the dominant asset in terms of value, even if manufacturing electronics at scale is larger in ph…

> Microsoft commoditized PC hardware No. Tandy (aka Radio Shack), Dell, Compaq, and so forth commoditized PC Hardware. Microsoft made the OS a commodity, reducing the cost of an OS from thousands of dollars to only $100. Android / iOS have done the same thing except reduced the cost to $0. The hardware manufacturers don't make as much as the software guys. Because people and habits are tied to the software, not hardw…

I think OP meant that Microsoft commoditized PC hardware through software, in other words by making Windows the thing that people wanted to have, and the hardware under it could be interchangeable.

Most people didn't care if they had a Dell or a Compaq, as long as it ran Windows.

So in this case: I don't care what hotel I stay in or who rents me a car, as long as I know that through Priceline I'm getting a good deal.

Re: Priceline now worth $100B

#165

Post by abakker »

wheaties wrote: post #16

This is stupid. Really. Here we are in a world where the companies that own the assets (you know, the things that cost a lot of money) are worth less than the things that don't own anything. This doesn't seem "right" or "fair" in the sense that Priceline should be a middleman, unable to exercise any or all pricing power because it does not control the assets producing the revenue. I wonder how long this can last?

Intermediaries can be great businesses, and good for the market. See the existence of wholesalers, brokers, etc. Just because the internet makes it easier to disintermediate a business doesn't mean the market forces that created intermediaries in general aren't valuable. News aggregators, price comparators, and online stores like amazon all aggregated various "productive" businesses and produce value for themselves and their customers in the process. Sometimes, DIY isn't the answer for everything; see https://en.wikipedia.org/wiki/Comparative_advantage

Re: Priceline now worth $100B

#166

Post by Tepix »

firefoxd wrote: post #151

For the past 2 or 3 years i saw commercials of kayak on tv. Everytime I'd be price shopping, I'd start with their website. It never worked. I couldn't understand why they would advertise on tv and then have a broken website. You know that page where it says it is doing the price comparison in the background? That's where it always stopped for me. Frozen, never updating. Last month, I was travelling again and went to…

I've never seen an ad for Kayak, however I've found some good car rental rates in the last two years using their mobile app.

Re: Priceline now worth $100B

#167

Post by losteric »

1zee wrote: post #133
xrange wrote: post #127

Earlier quoted context omitted.

>If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye. ...is that because you don't think non-HNer's don't have an appreciation for how much something like Walmart is worth (~$250B)? Or because you think they believe that $100B is a reasonable valuation? >Really is fascinating how different…

You know people that would not recognize any of those brands?

FWIW I've heard of one of those (Kayak), plus Priceline - and I only used Priceline a few times in college (they turned me off of using these tools).

Re: Priceline now worth $100B

#168

Post by baddox »

1zee wrote: post #133
xrange wrote: post #127

Earlier quoted context omitted.

>If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined, I don't think they would even blink an eye. ...is that because you don't think non-HNer's don't have an appreciation for how much something like Walmart is worth (~$250B)? Or because you think they believe that $100B is a reasonable valuation? >Really is fascinating how different…

You know people that would not recognize any of those brands?

Do they advertise on TV? If they do, then there's a decent chance my parents (in their 60s) know about them, otherwise it's very unlikely.

Re: Priceline now worth $100B

#169

Post by kolbe »

michaelmrose wrote: post #153
misterbwong wrote: post #112

If you were to tell a non-HNer that Kayak, Booking, Priceline, CheapFlights, OpenTable, and other large websites are worth 100B combined , I don't think they would even blink an eye. Come here and the top discussion thread is about how little Priceline does, how they're "just middlemen", and that they don't add any value. It's clear that HN (and techies as a whole, I assume) highly discounts the value of users, marke…

They are priced almost 50 times their earnings do they really have that much room to grow in the next several years?

I have serious doubts they have any room to grow. Seems like their entire business model depends on retaining monopoly pricing power in industries with very few barriers to entry.

Re: Priceline now worth $100B

#170

Post by kolbe »

wheaties wrote: post #16

This is stupid. Really. Here we are in a world where the companies that own the assets (you know, the things that cost a lot of money) are worth less than the things that don't own anything. This doesn't seem "right" or "fair" in the sense that Priceline should be a middleman, unable to exercise any or all pricing power because it does not control the assets producing the revenue. I wonder how long this can last?

Isn't that why Rockefeller went into the railroad industry? He was sick of seeing the transportation layer take all of his profits.
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