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How Priceline got its mojo working again

November 09, 2009 | Online Travel

Of all the dot-com superstars that appeared in the ’90s, shone brightly and then disappeared from sight, few have been granted a second act. One exception is Priceline, which 11 years after it was founded - and 10 years after its stock price collapsed - is quietly thriving, writes GigaOM

At its peak, Priceline’s “name-your-own-price” business model created a stir. Its founder, Jay Walker, trumpeted the idea as a revolution that would upend the travel industry, and a lot of smart people bought it. George Soros and Paul Allen invested their money, and the stock surged to a $15.7 billion market cap, larger than most airlines. Forbes called Walker a “modern-day Edison,” and Priceline expanded into new markets like gasoline and groceries.

The revolution was over before it began. Priceline’s stock peaked nearly a year before the Nasdaq did, and it just kept falling: By the end of 2000, its market cap had shrunk by 99 percent to $220 million. Forbes regretted its praise for Walker, admitting he “hasn’t lived up to our label,” and Walker left the company soon after. Priceline backed out of the gasoline and grocery businesses, retreating to online travel, where it faced increasing competition from Expedia, Orbitz and others.

But writing off Priceline as another failed dot-com also proved premature. Its approach wasn’t revolutionary after all, but neither was it a bad idea. Somewhat ironically, it took another market crash for Priceline to begin to deliver on its promise. Its stock, which has risen 265 percent in the past year, has joined the S&P 500 — the market’s way of saying you’ve finally arrived. Its capitalization is back above $7 billion, making it larger than Expedia.

Get the full story at GigaOM

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