Priceline Stock Sinks On Story
Shares of Priceline.com Inc. fell to a 52-week low on Thursday due to investor nervousness over an upcoming CBS News report that will focus on alleged consumer dissatisfaction with the e-commerce firm, analysts said.
According to CBS MarketWatch, (in which Viacom, the owner of CBS, has a share of ownership) at the close, shares were down $1.88, or 8 percent, to $21.56.
The stock had dropped by 10.4 percent earlier in the day. Priceline had not traded that low since its stock market debut at $16 on March 30, 1999.
Priceline shares have fallen 64 percent in the past year on investor concern about the profitability and viability of Internet stocks.
The Wall Street Journal reported on Thursday that alleged consumer dissatisfaction with Priceline will be the focus of a segment on the CBS TV show 48 Hours airing nationwide Thursday night.
CBS News confirmed the newspaper report and said the program would allege that more than 300 people have filed service complaints against Priceline since it began operations in April 1998.
CBS said the show would also reveal that William Shatner, Priceline's celebrity spokesman, does not actually use the company's services because he always flies first class.
The Norwalk, Conn.-based Priceline matches bids from buyers and offers from sellers on products and services ranging from groceries to airline tickets to hotel rooms and cars.
"There's a lot of scrutiny on their customer-service issues, which have been documented before and caused the stock to dip," said Tim Fogarty, an analyst at Thomas Weisel Partners.
Fogarty said the market was uneasy over the 48 Hours report. "It's kind of like being featured on 60 Minutes," the CBS TV news magazine known for its muckraking.
He added, "There is skittishness from investors over (possible) horrible news coming out."
Fogarty said Priceline is working hard to iron out any customer-service problems it may have. He said there are always "adoption curves" when consumers are learning how to use a new technology and business model. He maintained his "strong buy" rating on the stock.
Priceline officials declined to comment on the share price movement.
Brian Ek, a Priceline spokesman, downplayed the allegations about customer complaints. He said 300 alleged complaints seemed a low number compared with the more than five million airline tickets the firm has sold.
"Obviously, even one complaint is not acceptable to us," Ek said. "We've been making changes all along and we believe we've got a great product. We are committed to customer service."
Ek confirmed that Priceline was kicked out of the Connecticut Better Business Bureau (BBB) earlier this month, as the Wall Street Journal reported on Thursday. However, he said BBB membership is volunary, not required, and noted that other major Internet firms do not belong to it.
Priceline is working to rectify the BBB situation, he said. "We were both surprised and disappointed with a communication from them (this month) that is not (consistent with) what they told us (earlier) this summer," Ek said.