After the fall, traders see more problems for Priceline

Priceline shares plunged more than 10 percent after the company issued disappointing guidance on fourth-quarter booking growth in its earnings report. And according to some traders, the online travel company is facing even more problems in the near future.

Priceline said Monday it expects domestic booking to decline by 5 to 10 percent in the fourth quarter, while international bookings will increase by 17 to 24 percent. But David Seaburg, head of sales trading at Cowen & Co., said international growth will likely also be hindered by a strong U.S. dollar, since most of its business comes from overseas.

About 90 percent of gross bookings and operating incomes come from international brands, chief financial officer Daniel Finnegan said on the company's conference call. Executives also said growth rates were hurt by a stronger dollar, which should continue into Q4.

"It really becomes a bet on the dollar now, it's a currency trade," Seaburg said Monday on CNBC's "Power Lunch." "The [foreign exchange] headwind, it's a massive number, so I look at it and say that's going to plague them for the near term."

While Seaburg doesn't expect the stock to break below $1,300, Priceline will continue to face difficulties until the dollar weakens against other currencies, he said.

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On Monday, the day of the stock plunge, Stifel downgraded Priceline from a buy rating to hold, based on increasing competition from travel peers such as Expedia and TripAdvisor, as well as the slower growth expected in 2016. "Overall, we see limited investment opportunities in the travel vertical and await further development of new/current debates," Stifel's Scott Devitt wrote in a Monday report.

Expedia and TripAdvisor also fell 2.9 percent and 0.4 percent, respectively, on Monday.

But given the short-term weakness, technician Ari Wald of Oppenheimer said the pullback could present a chance to buy after the stock stabilizes.

"When you get this type of weakness amid longer-term strength, it does provide a buying opportunity and that's what we're seeing," Wald said Monday. "Yes we are indeed correcting from these overbought conditions, but support levels are still intact after this weakness."

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Wald said despite the sharp drop on Monday, Priceline's stock remains above its 200-day moving average and its year-to-date uptrend line. The company shares are still up 15 percent this year.

"I don't think it's off to the races just yet, but longer term, this is a buying opportunity," he said.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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