Fallen Angel: Travelzoo Inc.
Ralph Bartel, the founder and CEO of Travelzoo Inc. (Nasdaq:TZOO), has been buying up shares of the small-cap online travel publisher hand-over-fist. Time to take a closer look.
Since February, Bartel has scooped up several million dollars worth of Travelzoo stock. Bartel’s buying binge has come during a disappointing series of earnings reports for New York, N.Y.-based Travelzoo, a one-time high flier. At a recent price of $7.99 a share, Travelzoo trades near its 52-week low of $6.45, set in July, and well off its 52-week of $24.97, hit last September.
While it remains to be seen if Bartel is a savvy buyer of Travelzoo shares, he has previously shown a very good knack for knowing when to sell the stock. Bartel was wisely a big seller of Travelzoo shares around the $30 level back in 2006. Even after Bartel’s massive selling of Travelzoo stock two years ago, he still owns an over 60% stake in the now struggling small cap.
Travelzoo’s financial performance has been dragged down by a costly international expansion effort that has yet to pay off. At the same time, Travelzoo’s core domestic business has turned stagnant. Unlike travel companies such as Expedia, Inc. (Nasdaq:EXPE) and Orbitz Worldwide, Inc. (Nasdaq:OWW), Travelzoo doesn’t handle bookings, but rather serves as an aggregator of travel offers from around the Web. In fact, Expedia was one of Travelzoo’s largest advertisers last year. Through a series of websites, e-mail newsletters and alerts, Travelzoo provides information on offers from hundreds of travel companies to more than 12 million users.
For the second quarter ended June 30, Travelzoo reported revenue of $21.8 million, an 8% annual increase. As a result of Travelzoo’s aggressive expansion into Asia Pacific and Europe, this modest growth wasn’t able to overcome its enlarged cost structure. Travelzoo reported a second-quarter loss of $1.2 million, or $0.08 a share, . . .
Since February, Bartel has scooped up several million dollars worth of Travelzoo stock. Bartel’s buying binge has come during a disappointing series of earnings reports for New York, N.Y.-based Travelzoo, a one-time high flier. At a recent price of $7.99 a share, Travelzoo trades near its 52-week low of $6.45, set in July, and well off its 52-week of $24.97, hit last September.
While it remains to be seen if Bartel is a savvy buyer of Travelzoo shares, he has previously shown a very good knack for knowing when to sell the stock. Bartel was wisely a big seller of Travelzoo shares around the $30 level back in 2006. Even after Bartel’s massive selling of Travelzoo stock two years ago, he still owns an over 60% stake in the now struggling small cap.
Travelzoo’s financial performance has been dragged down by a costly international expansion effort that has yet to pay off. At the same time, Travelzoo’s core domestic business has turned stagnant. Unlike travel companies such as Expedia, Inc. (Nasdaq:EXPE) and Orbitz Worldwide, Inc. (Nasdaq:OWW), Travelzoo doesn’t handle bookings, but rather serves as an aggregator of travel offers from around the Web. In fact, Expedia was one of Travelzoo’s largest advertisers last year. Through a series of websites, e-mail newsletters and alerts, Travelzoo provides information on offers from hundreds of travel companies to more than 12 million users.
For the second quarter ended June 30, Travelzoo reported revenue of $21.8 million, an 8% annual increase. As a result of Travelzoo’s aggressive expansion into Asia Pacific and Europe, this modest growth wasn’t able to overcome its enlarged cost structure. Travelzoo reported a second-quarter loss of $1.2 million, or $0.08 a share, . . .
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