Two big shareholders in Priceline.com (PCLN) may have taken a cue from company spokesman William Shatner by asking Wall Street to "beam them up" after hanging on to the stock for several years. Shares of the online travel-reservations site tumbled nearly 9% on Sept. 6 after the company disclosed, following the close of trading on Sept. 5, that Hutchison Whampoa and Cheung Kong (Holdings) sold 8.9 million shares of the company's common stock—about 21%—via an offering underwritten by Goldman Sachs.
On Sept. 6, Standard & Poor's analyst Scott Kessler maintained his hold rating on the shares, and said that while the sale is "somewhat worrisome," he expects the deal to contribute to liquidity in the company's shares.
All told, Hutchison and Cheung Kong sold 70% of their Priceline stake, but still own 9% of the shares. Hutchison and Cheung Kong will continue to have the right to appoint representatives to Priceline.com's board. The company noted in a press release that Hutchison and Cheung Kong have been investors since 2001 and "have supported our business through some difficult times, including the aftermath of September 11."
RECOVERY IN TRAVEL.
The Sept. 6 sell-off comes after a hefty runup in the share price over the past year, and the stock is trading well above its 52-week low of $18.20 reached last fall. Credit the uptrend in the shares to a continuing recovery in the travel industry and an increased set of offerings from recent acquisitions.
Investors may have been worried that Hutchison and Cheung Kong saw limited upside in the shares, and chose to take most of their chips off the table. Indeed, the site still faces some headwinds. In an earlier report on the company, Kessler wrote that S&P "see[s] competition increasing in the online travel segment (from other online travel agencies and travel suppliers that have spent heavily on their own Internet offerings)" and notes an uptrend in Internet advertising costs.
Investors may want to keep those challenges in mind amid the high-profile stock sales.