What can you do? YTB is a "Darling"
Oh my, what a bad morning to be out building business when I could have been at home posting this…
More on the big news in a minute, but first I wanted to send out my thanks to each and every one of you who have sent e-mails, made comments and even phoned me about my new book “What the Critics Know about YTB”. While I hoped the response would be positive, I had no idea it would be received as well as it has. I also noticed a huge increase in people subscribing to my Newsletter and again remind everyone that this Newsletter is open for all of YTB to enjoy.
Because of the HUGE response to the book, I have decided to start a series of books, much like the Dummies books that have gained so much popularity. (Networking for Dummies, Windows for Dummies, e-Bay for Dummies are just a few that come to mind.) Please note; that I am in no way implying that there is some sort of parallel between dummies and critics, as some may make that connection. ;-P
After seeing the following news, my next title and subject will be “What the Critics can do to Stop YTB”. Rest assured it will have the same insight, and power packed punch of the first book.
Stay tuned!
Now, on to this big news! What do you get when you Google Wall Street and YTB? We find an article by none other than John Gilliam, who has some pretty impressive credentials to his name. John has some advice for everyone in an article entiled, YTB International: Wall Street's Next Online Travel Darling Since I couldn’t have said this any better myself, nor do I really want to, I’m just going to link to this article and do a copy and paste of the key points of this fine piece of investment advice and how smart people look at our company.
Enjoy!
This brings us to the stock we believe investors should consider - a company called YTB International (YTBLA.PK) (hereinafter “YTB“).
YTB International is a rapidly growing company in the online travel space. While both PCLN and YTBLA operate in the online travel space, their core business models are so different that it makes most comparisons of their respective businesses less than meaningful - it would be like comparing apples with oranges. However, we see much commonality between the two companies from an investment standpoint - with PCLN as a model of the kind of stock price appreciation that could be achieved by a company in this space under the right circumstances. Simply put, we see potential for investors in YTB stock to earn the kind of return long term PCLN investors have enjoyed.
YTBLA is currently traded on the pink sheets and we have never recommended a stock that trades on the Pink Sheets before. However, YTBLA is current on all listing requirements, expects to be listed on the OTCBB within the next few weeks and we fully expect that the company will be listed on a national exchange before the end of this year. We have also never recommended a company with a multi level marketing model, though We have reviewed many of them over the years and can appreciate the wealth and value created by billion dollar companies like Avon (NYSE: AVN), Tupperware (NYSE: TUP), Herbalife (NYSE: HLF) and PrePaid Legal Services (NYSE: PPD). Despite these two factors, we are still recommending YTBLA because we believe they are poised to be a significant player in the online travel space and we further believe that investors in the stock at today’s prices could see Priceline type gains over the next few years and possibly sooner.
As mentioned previously, YTBLA’s business model is very different from PCLN and EXPE, each of whom operates a website that is designed to be a portal through which consumers book travel online. PCLN and EXPE spend millions of dollars in advertising each quarter to attract consumers to their websites in hopes that they will book travel thereby earning the company commissions or merchant revenues. YTB spends very little on advertising, relying instead on a network of “referral travel agents” (hereinafter “RTAs”) to book travel through their own private labeled YTB website. These referral travel agents pay YTB a start up fee (around $499), then a monthly fee ($49) to host their online booking engines. The referral travel agents then earn a commission on each booking, a small percentage of which is retained by YTB. Thus, YTB earns revenue each time a new RTA signs up, then earns monthly hosting fees and commissions from each RTA.
Thus, even though both companies operate in the online travel space, the business models and revenue generation engines are quite different. The more important recognition here, we believe, is that from an investor’s standpoint, YTB is a company that is in a very similar position to where PCLN found themselves five years ago. At that time, PCLN had a flagging stock price and many questions surrounding its business model, despite the fact that it was making obvious strides in its quest to turn the corner to profitability.
This is similar to the storyline we are see today for YTB, where the company has dealt with several bumps in the road, most of which were related to either its ability to manage very high volume growth in a very short time or attempts by competitors to try and slow the company’s march forward.
It appears that these bumps in the road have been unable to stop or even slow YTB’s momentum. The company’s most recent annual report shows staggering gains in bookings, commissions earned, revenue and steady gains in the number of RTA‘s who have signed up to participate. The company grew gross travel bookings more than 187% in 2007 over 2006 and saw the base of active RTA’s more than double. The company reported its third profitable quarter in a row, its first full year profit and it appears to have reached a point in its growth cycle where it has achieved the critical mass necessary to grow revenues significantly without a commensurate increase in expenses. We saw evidence in the recent 10K filing that indicated general and administrative expenses as a percentage of total revenue fell to only 26.1% in 2007 from 36.5% of revenue in 2006.
Another way we expect the company to grow margins is by earning higher percentage commissions. A very good indicator of this trend was reported in the recent 10K filing. The company reported an 84% gain in gross total bookings, which led to a 178% gain in gross total commissions received. As the company establishes itself as a high volume source of bookings for travel suppliers, the suppliers are willing to pay higher commissions and overrides. This accrues to the benefit of YTB as well as its RTA’s.
We see an opportunity for the company to further expand margins by building or buying its own wholesale business. By becoming the “merchant of record” for travel transactions, particularly lodging, YTB can expand on the traditional 10% commissions to instead earn effective rates in the 20 - 35% range. We note that it was a similar move into wholesale lodging reservations by Priceline in 2003 that allowed them to make the jump to profitability and that their acquisition of one of Europe’s largest lodging wholesalers that has been the catalyst for Priceline’s dramatic growth the last three years.
We believe further expansion of the company’s margins are possible as the company leverages the value of its network of 130,000+ active websites. The company’s cost to roll out additional product offerings through their RTA website channel is next to zero as is their risk. As such, we expect to see several new products offered through the RTA network in 2008, each of which could have a material impact on YTB’s financials.
In summary, we believe that YTB’s status as a pink sheets listed company that lacks Wall Street coverage or even main street attention has allowed the recent surge in its business to go unnoticed. The earnings acceleration and margin expansion simply have not been reflected in the stock price - as the stock has fallen more than 70% since the 2007 Q2 report of their first profitable quarter. With the stock currently hovering around the $1.65 per share range - we feel that the stock has the potential for exponential returns as investors become more aware of the YTB story and the company continues its domestic and international expansion. We believe the company is on the verge of a margin breakout that could propel the company to several periods of high double digit year over year earnings growth and that investors will ultimately accord YTB the kind of earnings multiple usually associated with such growth. As such, investors at today’s prices could be buying into the proverbial “ten bagger” or even better, enjoy returns like 2003 investors in the PCLN story, who earned 20x their money in less than five years. If YTB can sustain growth at the half the rate it grew in 2007, YTB investors at today’s prices could do even better than that.
Disclosure: Author has a long position in YTBLA.PK
Note: The author of this blog also has a long position, and has for years. ;-P
More on the big news in a minute, but first I wanted to send out my thanks to each and every one of you who have sent e-mails, made comments and even phoned me about my new book “What the Critics Know about YTB”. While I hoped the response would be positive, I had no idea it would be received as well as it has. I also noticed a huge increase in people subscribing to my Newsletter and again remind everyone that this Newsletter is open for all of YTB to enjoy.
Because of the HUGE response to the book, I have decided to start a series of books, much like the Dummies books that have gained so much popularity. (Networking for Dummies, Windows for Dummies, e-Bay for Dummies are just a few that come to mind.) Please note; that I am in no way implying that there is some sort of parallel between dummies and critics, as some may make that connection. ;-P
After seeing the following news, my next title and subject will be “What the Critics can do to Stop YTB”. Rest assured it will have the same insight, and power packed punch of the first book.
Stay tuned!
Now, on to this big news! What do you get when you Google Wall Street and YTB? We find an article by none other than John Gilliam, who has some pretty impressive credentials to his name. John has some advice for everyone in an article entiled, YTB International: Wall Street's Next Online Travel Darling Since I couldn’t have said this any better myself, nor do I really want to, I’m just going to link to this article and do a copy and paste of the key points of this fine piece of investment advice and how smart people look at our company.Enjoy!
This brings us to the stock we believe investors should consider - a company called YTB International (YTBLA.PK) (hereinafter “YTB“).
YTB International is a rapidly growing company in the online travel space. While both PCLN and YTBLA operate in the online travel space, their core business models are so different that it makes most comparisons of their respective businesses less than meaningful - it would be like comparing apples with oranges. However, we see much commonality between the two companies from an investment standpoint - with PCLN as a model of the kind of stock price appreciation that could be achieved by a company in this space under the right circumstances. Simply put, we see potential for investors in YTB stock to earn the kind of return long term PCLN investors have enjoyed.
YTBLA is currently traded on the pink sheets and we have never recommended a stock that trades on the Pink Sheets before. However, YTBLA is current on all listing requirements, expects to be listed on the OTCBB within the next few weeks and we fully expect that the company will be listed on a national exchange before the end of this year. We have also never recommended a company with a multi level marketing model, though We have reviewed many of them over the years and can appreciate the wealth and value created by billion dollar companies like Avon (NYSE: AVN), Tupperware (NYSE: TUP), Herbalife (NYSE: HLF) and PrePaid Legal Services (NYSE: PPD). Despite these two factors, we are still recommending YTBLA because we believe they are poised to be a significant player in the online travel space and we further believe that investors in the stock at today’s prices could see Priceline type gains over the next few years and possibly sooner.
As mentioned previously, YTBLA’s business model is very different from PCLN and EXPE, each of whom operates a website that is designed to be a portal through which consumers book travel online. PCLN and EXPE spend millions of dollars in advertising each quarter to attract consumers to their websites in hopes that they will book travel thereby earning the company commissions or merchant revenues. YTB spends very little on advertising, relying instead on a network of “referral travel agents” (hereinafter “RTAs”) to book travel through their own private labeled YTB website. These referral travel agents pay YTB a start up fee (around $499), then a monthly fee ($49) to host their online booking engines. The referral travel agents then earn a commission on each booking, a small percentage of which is retained by YTB. Thus, YTB earns revenue each time a new RTA signs up, then earns monthly hosting fees and commissions from each RTA.
Thus, even though both companies operate in the online travel space, the business models and revenue generation engines are quite different. The more important recognition here, we believe, is that from an investor’s standpoint, YTB is a company that is in a very similar position to where PCLN found themselves five years ago. At that time, PCLN had a flagging stock price and many questions surrounding its business model, despite the fact that it was making obvious strides in its quest to turn the corner to profitability.
This is similar to the storyline we are see today for YTB, where the company has dealt with several bumps in the road, most of which were related to either its ability to manage very high volume growth in a very short time or attempts by competitors to try and slow the company’s march forward.
It appears that these bumps in the road have been unable to stop or even slow YTB’s momentum. The company’s most recent annual report shows staggering gains in bookings, commissions earned, revenue and steady gains in the number of RTA‘s who have signed up to participate. The company grew gross travel bookings more than 187% in 2007 over 2006 and saw the base of active RTA’s more than double. The company reported its third profitable quarter in a row, its first full year profit and it appears to have reached a point in its growth cycle where it has achieved the critical mass necessary to grow revenues significantly without a commensurate increase in expenses. We saw evidence in the recent 10K filing that indicated general and administrative expenses as a percentage of total revenue fell to only 26.1% in 2007 from 36.5% of revenue in 2006.
Another way we expect the company to grow margins is by earning higher percentage commissions. A very good indicator of this trend was reported in the recent 10K filing. The company reported an 84% gain in gross total bookings, which led to a 178% gain in gross total commissions received. As the company establishes itself as a high volume source of bookings for travel suppliers, the suppliers are willing to pay higher commissions and overrides. This accrues to the benefit of YTB as well as its RTA’s.
We see an opportunity for the company to further expand margins by building or buying its own wholesale business. By becoming the “merchant of record” for travel transactions, particularly lodging, YTB can expand on the traditional 10% commissions to instead earn effective rates in the 20 - 35% range. We note that it was a similar move into wholesale lodging reservations by Priceline in 2003 that allowed them to make the jump to profitability and that their acquisition of one of Europe’s largest lodging wholesalers that has been the catalyst for Priceline’s dramatic growth the last three years.
We believe further expansion of the company’s margins are possible as the company leverages the value of its network of 130,000+ active websites. The company’s cost to roll out additional product offerings through their RTA website channel is next to zero as is their risk. As such, we expect to see several new products offered through the RTA network in 2008, each of which could have a material impact on YTB’s financials.
In summary, we believe that YTB’s status as a pink sheets listed company that lacks Wall Street coverage or even main street attention has allowed the recent surge in its business to go unnoticed. The earnings acceleration and margin expansion simply have not been reflected in the stock price - as the stock has fallen more than 70% since the 2007 Q2 report of their first profitable quarter. With the stock currently hovering around the $1.65 per share range - we feel that the stock has the potential for exponential returns as investors become more aware of the YTB story and the company continues its domestic and international expansion. We believe the company is on the verge of a margin breakout that could propel the company to several periods of high double digit year over year earnings growth and that investors will ultimately accord YTB the kind of earnings multiple usually associated with such growth. As such, investors at today’s prices could be buying into the proverbial “ten bagger” or even better, enjoy returns like 2003 investors in the PCLN story, who earned 20x their money in less than five years. If YTB can sustain growth at the half the rate it grew in 2007, YTB investors at today’s prices could do even better than that.
Disclosure: Author has a long position in YTBLA.PK
Note: The author of this blog also has a long position, and has for years. ;-P
Doug & Ronda Bauknight
AKA: TravelPro
Travel Agent / Networker
Phone: 678.458.5812
Learn How To Become A Travel Agent
Book Your Travel & Vacations With
Travel Reservations: 1.800.243.4450
RTA #24635
Labels: John Gilliam, Wall Street, YTB Travel Network, YTBLA
Your 'book' doesn't have anything written in it. What I know about YTB....blank.
that's hilarious for sure.
Posted by
Anonymous |
Wednesday, April 02, 2008
I LOVE your blog Doug! I’ve got a feed on my desktop and when I saw “Darling” I knew you had seen this. How AWESOME is news like this? How far do you think it’s going to go?
Posted by
Anonymous |
Wednesday, April 02, 2008
Word has it that this guy Gilliam has “The Golden Touch”. Everything he picks is a winner. I saw something on the Yahoo message board you need to see regarding this guy’s track record.
Very eye opening!
Chuck
Posted by
Anonymous |
Wednesday, April 02, 2008
Gee, wonder how the Critics will try to spin this news. They’re already crying about the $414 Million in Travel Sales and how much is made selling our booking engines. Who cares what they think. It’s the New Face of Travel in the industry, and they better own up to that or they will be without an agency much longer.
Tim
Posted by
Anonymous |
Wednesday, April 02, 2008
Dummies books, great idea! You should sell these books, you’d make a mint!
Posted by
Anonymous |
Wednesday, April 02, 2008
Doug,
I noticed that your blog already ranks very high when you Google this. Someone commented that they found you as the first link yesterday. How did you do this?
Wondering minds want to know?
Posted by
Anonymous |
Wednesday, April 02, 2008
I wonder what that Andrew Left thinks about YTB now. LOL! My what a difference a year can make.
Posted by
Anonymous |
Wednesday, April 02, 2008
Looks like there is a light at the end of the tunnel. Unfortunately for the TTA’s it’s in the form of a freight train barreling down the tracks. Go YTB!
Posted by
Anonymous |
Wednesday, April 02, 2008
Someone posted about the other companies covered by this analyst so I did a little checking. In the 5 days that followed his first article on Local.com, the stock traded from $3.90 up to over $13 per share and was the highest volume stock traded on the Nasdaq for two of those days. Prior to his article, the stock only traded less than 100,000 shares per day - after the article, it traded over 8 million shares per day on two consecutive days. The stock then traded back lower after the company did a private offering below the market price, which of course killed the rally. Chance to sell for 300% gain in five trading days isn't too bad.
He did an article on Looksmart.com when the stock was at $2.40 and within a month the company did a auction type tender offer with a range of $3.60 - $4.10. 50% gain in a couple of months not too bad.
He did an article on Miva when the stock was at $1.45 and the stock traded up to $2.30 in the days that followed. That's a 50% gainer in a few days.
He did an article on Marchex at $8 and the stock is now over $11 per share.
This guy has a really good track record of finding stocks that are below the radar and bringing alot of attention to them in a hurry. I have to think that this article is going to be distributed at every RTA meeting over the next few months and this should cause quite a bit of buying by RTA's and other retail investors.
Posted by
Anonymous |
Wednesday, April 02, 2008
What an awesome week it has been for YTB!! 2008 is the year of "New Beginnings". How true this has been turning out for YTB!
http://gailtravel.blogspot.com/
Posted by
Unknown |
Wednesday, April 02, 2008
FYI – The TTA’s over on John’s blog send their love. It’s funny how they can’t stand you, but are still reading you here. Eddie constantly uses this “Picture It Now” quote, Martha is still vomiting, and YTBScam thinks Dougies new book is joke. (First thing I think he’s ever been right about actually.)
I got this in my in e-mail today from someone, and I think you know what he’s talking about.
“Psychologists and motivational speakers, like Earl Nightingale, suggest the mind is very much like the land on a farm. The land gives the farmer a choice. He can plant whatever he chooses since the land doesn't care. It is up to the farmer to make the decision. Our subconscious mind, like the farmer's land, doesn't care what we plant either. It will return whatever we plant. Once the seed is planted and watered, it will grow. Seeds of success or seeds of failure are available for planting. We can plant seeds of success and harvest happiness or seeds of failure and harvest disillusionment and discontent. What are you planting?”
You can certainly tell who is happy and who is discontent. ;-P
Alan
Posted by
Anonymous |
Thursday, April 03, 2008
Alan:
I couldn’t agree more with your quote. Earl Nightingale may have been one of the first to speak of the mind like land on the farm, but I can tell you that there are many who also teach these same principles today. It’s also ages old…You reap what you sow.
It makes little difference what any of the TTA’s think of me. It speaks more of them than it does about me.
I still take a little time every so often to read what’s being said out there, and I’ve seen some of the same things you have. At one time, I would tell you that Martha’s comments would have bothered me, and probably Eddies too. (YTBScam has always been just plain dumb “in my book”.) When you look at the source, you have to wonder why it should even hold any value. They are bitter, angry and resentful.
Just not my cup of tea.
I have a choice. Would I rather be happy, or would I rather try to please a bunch of discontents? I have good solid friendships that I value in YTB. I don’t know those people from Adam, and they honestly don’t know me.
There isn’t much else they can do at this point and they will soon find that all the time and negative energy they are spending focused on YTB is a complete waste of time. When it’s all over, their own land will be full of weeds because their not spending enough time there cultivating and growing fruit.
Posted by
TravelPro |
Thursday, April 03, 2008