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Trip.com: Increasing Risks After Delayed Q4 Report And Rising Coronavirus Numbers

Mar. 02, 2020 8:33 PM ETTrip.com Group Limited (TCOM)4 Comments
WY Capital profile picture
WY Capital


  • Analysts are only forecasting a 20% decline in TCOM revenues, but we believe the impact of the coronavirus could be much worse.
  • Although some work has resumed, leading to slightly higher demand for travel, tourism is still at a standstill.
  • The coronavirus is spreading quickly internationally and could also cause a fall in demand for TCOM's international travel services.

In late January, we warned investors that Trip.com (NASDAQ:TCOM) could be hurt very badly by the spreading coronavirus as millions of flights and other travel bookings would be canceled.

Source: Seeking Alpha

So far, TCOM is down around 8% since our article. However, with the situation in China has gotten much worse, so we believe investors are still overly optimistic about TCOM's prospects.

Excessive optimism

With the coronavirus outbreak worsening, many analysts have cut TCOM's estimates. However, after looking at these revisions, we can't help but feel that these analysts are way too optimistic.

Source: Seeking Alpha

For example, Q1 revenue estimates have been cut from around $1.3bil to around $1.1bil, which is a decline of just 18%. Meanwhile, the Chinese Tourism Academy has forecasted that domestic tourism revenue will plummet 69% and number of trips could plummet 56% in Q1 2020.

For Q1 2020, domestic tourism revenue is expected to plummet 69 percent year-on-year, as Chinese consumers have been quarantined to their homes due to the respiratory virus amid efforts to combat it, said the report released by the China Tourism Academy (CTA). The total number of trips could fall by 56 percent year-on-year, the report also said.

Source: globaltimes.cn

An independent survey by Bespoke investment also showed that nearly 90% of shoppers planned to travel less or much less. Also, TCOM management recently announced that they were delaying the announcement of their Q4 results to get more clarity regarding the coronavirus outbreak. We believe this signals that pretty bad news might be coming.

Source: bespoke investment

Admittedly, things seem to be getting better in China as the recent daily increases in cases have started to slow, stabilizing to below 1,000 new cases per day in the last 1-2 weeks.

Source: BBC

Work has resumed in many provinces, with

This article was written by

WY Capital profile picture
Looking out for underrated companies that could shape the future of humanity, or just provide strong returns over the long run. Note that my opinions could change after conducting more research or based on anything, honestly. DYODD

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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