Priceline Group Inc. (PCLN) shares were down 7.71% to $1,890.95 in Wednesday midday trading, as a tough forecast for the coming quarter discouraged investors despite a second-quarter earnings beat.
The travel booking site reported adjusted second-quarter earnings Tuesday of $15.14 per share, easily topping analysts' $14.19 per share estimates. Revenue of $3.02 billion also beat the Street's $2.99 billion expectations.
However, the company said it expects to earn between $32.40 and $34.10 in the third quarter, short of Wall Street's guidance for $34.14 per share.
Priceline's strength in the latter half of last year sets the company up for some challenging comparisons in the next two quarters.
"The comp is particularly difficult," CFO Daniel Finnegan told investors. Nights booked grew 29.4% and 31% in the third- and fourth quarters of 2016. Revenues grew 18.9% and 17.42% in the third and fourth quarters, respectively.
"The deceleration is consistent with long-term trends and our size," CEO Glenn Fogel explained.
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While the next two quarters may be challenging, the Priceline CEO said that macro factors such as the shift from offline to online travel spending should work in its favor. "We still have a very, very large market opportunity," Fogel told investors.
China is Priceline's most important market, Fogel said, noting that the company has invested in local travel company Ctrip.com.
"Asia is a great opportunity in the travel industry because a lot of people are becoming first-time travelers," Fogel said of the region. "When you have very strong growth opportunities, you have a lot of players come in and the players come in with a lot of capital."
It is more difficult to gain market share for a public company that needs to report a profit, he added, than for a private company that "raises capital and gives it away to the consumer" through discounts.
While Fogel did not call out specific companies, rival Expedia Inc. (EXPE) has invested $350 million in Indonesian outfit Traveloka in July.
Despite an after-hours tumble Tuesday, Priceline is still up about 29% this year.
Updated from 4:12 p.m. with additional information.
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