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Priceline.com Inc. (Nasdaq: PCLN) has done a lot of things right over the past decade or so, and investors have rewarded it by sending its stock to more than $1,000 this year.
As impressive as that is, however, it begs the question of how much value is left in Priceline stock.
After all, Priceline.com, an online travel services company that allows travelers to shop for hotel rooms, airline tickets, and rental cars, has risen a whopping 80% this year alone.
Some don't see this ride ending anytime soon. Goldman Sachs (NYSE: GS), for instance, added Priceline to its conviction buy list recently (here's why that in itself should be a red flag).
Goldman also raised its 12-month price target to a lofty $1,500 from the previous $1,260 (PCLN closed Wednesday at $1,183.22).
And the truth is, Priceline has done astoundingly well by just about every metric. Its total bookings for the third quarter totaled $10.8 billion – up 38% from the same quarter last year. The key metric here is that 42% of that increase came internationally, while 17% of the increase came from the United States.
Few people realize that nearly 85% of Priceline's business is done overseas. More specifically, a vast majority of the company's growth comes from its Booking.com website that caters to those looking for hotel accommodations throughout the world, but primarily in Europe.
Even with the soft European economy, Priceline has thrived with help from the burgeoning Chinese middle class, as well as Russian tourists, who book hotels throughout Europe.
Thanks not only to Booking.com, but also the Priceline brand of Agoda.com, which primarily caters to travelers in Asia, the company has the entire globe covered.
But even this geographical diversity will not be enough to shield Priceline stock from a phenomenon that will soon threaten the company's profits.