Kayak (NASDAQ:KYAK) Financial AnalysisAs is the case with the analysis of any IPO, there is only limited publicly available information. Let’s go with what we have. In terms of annual sales and earnings per share, the numbers are as follows:
And we do have the past 9 quarters as well as the expectations for Q2 2012 from Kayak (I used the middle of their range for both sales and earnings):
ShareholdersThe top companies selling will be ones you’d expect for most web related IPO’s so Sequoia Capital, Accel Partners and General Catalyst which is Kayak’s biggest shareholder.
Other Points Worth Noting-Strong Product: You would think that travel search would be a fairly simple business but from the experience of so many users that I know, Kayak has been the one strong product available. It offers more flexibility but more importantly better results.
-Strong Brand: Kayak is one of the stronger internet travel brands and has thus been able to grow quickly with little advertising, through word of mouth. It has also made Kayak the first stop (and often only one too) in traveler’s search for flights, hotels and more.
-Weak Community: While some competitors such as Travelzoo (NASDAQ:TZOO) have access to user emails, a much more personal way that creates better customer retention and TripAdvisor (TRIP) has been able to build a strong community, built off of Facebook’s infrastructure, Kayak has not put much focus on that. The issue that creates in my opinion is that its downfall could happen much more quickly as users would simply move on if better products emerge from Kayak’s competitors.
-Existing And Emerging Competition: In what is already a very competitive space, with Priceline (NASDAQ:PCLN), Orbitz, Expedia, TripAdvisor and many other smaller players, there looms the threat of a much stronger competitor. Google was able to buy ITA, a company that gives access to a database of flgihts and potentially gives Google the ability to both build a much stronger search engine but also shut out to some extent competitors such as Kayak. It’s unlikely to happen overnight but there is no doubt that Kayak and others lobbied hard for antittrust authorities to veto the deal.
ValuationsIn the end though, it comes down to valuations. First off, let’s take a look at the main competitors:
|Ticker||Name||Price||EPS||PE Ratio||PE Next Year||Return YTD||Sales Growth||Analyst rating||Beta|
|CTRP||Ctrip.com International Ltd||15.67||1.19||14.64||10.7||-34.32||27.31||3.18||1|
|OWW||Orbitz Worldwide Inc||4.3005||-0.36||204.5||9.3||8.78||1.23||2.82||0.89|