Key Takeaways:
Trip.com Group reported Q1 net income of 2.5 billion yuan ($363 million), down 42% from a year earlier, and forecast the slowest revenue growth in years as macroeconomic headwinds and a regulatory probe weigh on the Chinese online travel leader.
"The macro environment remains challenging, and we are taking a prudent approach to the second quarter," management said on the earnings call, citing ongoing macroeconomic uncertainty, elevated energy costs and geopolitical tensions.
Revenue rose 17% to 16.2 billion yuan in the three months ended March 31, beating the consensus estimate of 15.9 billion yuan. Adjusted earnings per share of $0.83 missed the $0.91 analyst forecast, according to data compiled by Bloomberg. The company's international business was a bright spot, with gross bookings on its global platform surging about 65% and inbound travel bookings jumping roughly 90%.
Shares of the Hong Kong-listed stock tumbled 10.6% to HK$31.60, their lowest since August 2024. The US-listed ADR fell 12.5% to $40.48, dragging the Nasdaq Golden Dragon China Index down 2.7%. The selloff erased about $4.5 billion in market value.
The second-quarter outlook was the primary trigger for the decline. Trip.com expects revenue growth of just 3% to 8% from a year earlier, a dramatic slowdown from the first quarter's 17% pace. The guidance implies net revenue of roughly $2.2 billion to $2.3 billion, below the $2.4 billion analysts had projected.
Adding to investor concerns, Trip.com disclosed it is under investigation by China's State Administration for Market Regulation over alleged monopolistic practices. The company said it is cooperating with regulators but warned the probe could result in substantial financial penalties or require changes to its business operations.
The sharp decline puts Trip.com at its lowest valuation in nearly two years, testing support near the HK$30 level. Investors will watch for any updates on the regulatory probe and whether the company can sustain its international growth momentum as the domestic travel market slows.
This article is for informational purposes only and does not constitute investment advice.
