There are no free passes for Internet commerce names, even though many of them are doing much better than you might have expected a few years ago. Tripadvisor (TRIP) and HomeAway (AWAY) join Priceline.com (PCLN) in disappointing investors. FireEye (FEYE), everyone's "favorite" on Twitter (TWTR), shows why it couldn't be trusted, after the insider selling and a major guide-down. Zulily (ZU) seemed poised to be the next Amazon.com (AMZN) on the good side, but its fourth-quarter revenue growth projections of 52% to 62% is not enough.
What's happening? The market's saying: "you can't do it on your own. You have to be part of a larger organization, because you are tapped out of growth. You need to sell out. I have seen this attitude before, toward Kayak (KYAK) and OpenTable (OPEN). It seemed as if no matter what these companies did, it wasn't enough.
You could argue that the underpinnings of these companies' stocks left no room for error, but I think it's more of a cycle. Facebook (FB), Google (GOOGL), Yahoo! (YHOO) and Aliababa (BABA) have choices to make: do they build or buy? They have the money to do whatever they want. The companies that have disappointed investors tonight have good franchises, but these aren't the stocks you want to own, if you are looking for bountiful earnings per share.
These smaller Internet commerce stocks had already been clobbered not long ago. They join Yelp (YELP) in the stable of companies that would fit better under another roof. Nevertheless, they want to duke it out because they feel they can do it themselves, and they know their stocks are still too expensive for any acquirer to buy without drawing criticisms of overpaying.