Five months ago, Travelzoo, an old Internet 1.0 company, decided to expand their business by launching a Groupon competitor.
They have always been known for sending a weekly email with travel deals to their 21+ million subscribers. Why not try to send their subscribes some of these local daily deals? They started by offering daily deals to their Des Moines and Minneapolis subscribers.
How did they do? Really, really well.
Four months later, they expanded their daily deals business from 2 markets to 25 markets. Their first New York City deal outsold every deal Groupon has ever run in New York and their current deals are selling extremely well. They have also expanded internationally and their first London deal, a £49 spa deal, sold a shocking 2,142 units.
How has Wall Street reacted to Travelzoo’s daily deal expansion? Their stock, at $45, has tripled from their average trading price of $15 in August.
Travelzoo Stock Up 200% in Last 4 Months
Photo: Yipit blog
Travelzoo’s core travel business was valued at $250 million back in August before they launched their daily deal segment. Speaking with several Wall Street analysts, their core travel deal business is now valued between $250 million and $350 million.
Since their market cap is now at $750 million and taking into account the $35 million of cash on their balance sheet, Wall Street is implying a $360 million to $460 million valuation for their new daily deal business.
Not bad for four months of work.