Priceline PCLN fell more than 10% from HYSTERIA levels

31 thg 3, 2014

$62 Billion for a company doing $6.79 billion in revenue is HYSTERIA still. I pointed out PCLN a month ago when the valuation was RIDICULOUS, LUDICROUS and HYSTERICAL.

Since then the price has fallen at least 10% and is attempting to regroup here at the still insane 9.22 times sales level (See the bottom section of the graph).

So, the strategy from here at 1202 on PCLN?

I would like to recommend shorting new positions at the 1300 level, an 8% rally from current prices. At 1300 I feel the risk/reward is significantly in favor of a low risk entry on the short side. I would look to cover at 8 times sales or at a $54 Billion Market Cap ($6.79 B sales x 8 = $54 B). If you can short at 8% higher and cover 12% lower, that is a 20% return with very little risk, perhaps just 6% risk for a greater than 3:1 return versus risk.

If you are already short from the last post, it is hard to hold onto a winner like this but I'd suggest you do. Once the 2nd quarter gets started, portfolio managers will be more likely to cut this overvalued stock from their portfolios and that will drive the price down as there is no room for error up at these stratospheric levels of valuation.

Cheers.

Tim 1:16PM EST Monday, March 31, 2014 1203.6 last PCLN