Trip.com's 49% Plunge: Growth Slows, Regulatory Risks Loom

Shares of Trip.com Group (TCOM) fell 12.6% on Thursday, touching a new 52-week low of $38.04 before closing at $40.49. The selloff came after the company's second-quarter outlook called for revenue growth of just 3% to 8%, a sharp deceleration from the 17% pace in the first quarter.

The Q1 results, reported after the bell Wednesday, showed a business still running hot. Earnings per share came in at 83 cents, a penny above year-ago but two cents below the consensus 85 cents. Revenue of $2.35 billion beat estimates by about $50 million. Inbound travel gross bookings rose roughly 90% year over year. The international online travel agent platform posted a 65% increase in gross bookings. Chief Executive Jane Sun credited the strength to “the continued expansion of global travel demand and the growing strength of the international platform’s capabilities.”

The Q2 guidance shifted the narrative. Chief Financial Officer Cindy Wang told analysts that higher oil prices and geopolitical tensions are pushing up airfares, tightening capacity, and disrupting long-haul routes. She also cited near-term pressure from operational upgrades tied to evolving industry standards and compliance requirements. The company did not quantify the compliance cost impact.

Trip.com is also facing an anti-monopoly investigation by China's State Administration for Market Regulation. The probe prompted the company to shut down an AI-powered hotel pricing tool and adjust other business practices. That regulatory overhang has already drawn several U.S. securities class action lawsuits. Disclosure of the investigation in January sent the stock down 17% in a single day.

Thursday's drop deepened a slide that began at the year's high of $78.99 on Jan. 12. The stock is now down roughly 49% from that peak. Market capitalization has fallen from just over $50 billion to about $26 billion by the June 25 session.

Despite the selloff, Trip.com trades at a steep discount to its peers. The forward price-to-earnings ratio sits at roughly 11x, versus Booking Holdings' 17x and Airbnb's 30x. On a price-to-sales basis, Trip.com trades at about 2.9x revenue, compared with Booking's 5.2x and Airbnb's 7.2x.

At least one analyst has already trimmed their price target following the report. The consensus rating remains Moderate Buy, with eight Buy and three Hold ratings. The average 12-month target of about $68 implies more than 65% upside from the current price. That target may shift if more analysts revise downward.

The risk for long holders is that the regulatory investigation drags on or escalates, delaying a recovery in investor confidence. A resolution – or a clear signal that growth is reaccelerating – would reduce the uncertainty. The Q2 earnings report, due in late August, will be the next scheduled update. Before that, any change in the regulatory status or analyst guidance would move the stock.

Trip.com ended Thursday at $40.49. The average price target suggests room to run if the macro conditions that influence travel demand improve and the regulatory picture clears.