Friday, December 17, 2004


Travelzoo’s 8 million subscribers

So let’s do a little math: 8 million subscribers divided into a market cap of $1.5 billion is $187 per subscriber (okay, I know, I’ve already lost most TZOO longs by this point). Ahh... memories of 1999. How many companies back then touted their subscriber counts? And how many of them are still around now? Okay, there’s Amazon, EBay, Yahoo...and and .. well, you get the idea. Of course, even the word “subscriber” is misleading. How many of Travelzoo’s emails actually get read? I would wager only a small minority, with the rest deleted at first sight, and/or send directly to the old spam folder. Come to think of it, I actually subscribed to Travelzoo’s service a few years ago. It now goes straight into the bulk mail folder never to be seen again. Let’s ask an honest question: how many subscribers would Travelzoo had if each “subscriber” were asked to pay $1 per year for the service. My hunch is a lot less than a million, which makes Travelzoo one overvalued company. It’s a bit like saying that my local pizza parlor has thousands of customers because that’s how many flyers they stick under the door.

Great blog, please keep it up.

TZOO has been burning shorts really bad.. every time "it can't get any more overvalued" it does.

That said, it looks like TZOO may have put in a "lower high" early this month that could set the stage for pullback. Good luck on this one, it's a bit too risky for my taste!
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