What: Shares of Qunar Cayman Islands, Ltd. (QUNR) fell more than 16.6% Monday as the broader Chinese stock market pulled back. Qunar also revealed significant management changes.
So what: The primary culprit behind today's plunge appears to be the former; The Shanghai Stock Exchange Composite Index plunged a harrowing 6.9% Monday, while the Shenzhen Composite Index dropped 8.2% after a new report showed China's manufacturing sector contracted at the end of 2015.
Even as China halted equities trading in response, many U.S.-listed China stocks fell as a result. That included a nearly 3% decline in Ctrip.com (TCOM -0.61%), which completed a share swap roughly nine weeks ago with Baidu in exchange for shares representing around 45% of Qunar's voting interest.
With that in mind, likely exaggerating Qunar's decline today was its management shakeup, which included appointing Zhenyu Chen (formerly head of Qunar's mobile business group) as Qunar's new CEO, Qiang Zhang (former head of the destination services business group) as chief operating officer, and Xiaolu Zhu (former Senior Director of Strategy and Investor Relations) as its new chief financial officer. Note that Zhang, for his part, was only just promoted to his role at the destination services group in September, when Qunar announced a separate organizational realignment just prior to the Ctrip deal in October.
Consequently, Qunar's co-founder, CC Zhuang, is stepping down from his post as director and CEO, and Yilu Zhao will step down from her post as CFO. Both Zhuang and Zhao will serve as senior advisors until the end of the first quarter. Qunar also announced three new independent directors to be added to its board -- Jimmy Lai, Jianmin Zhu, and Ying Shi.
Now what: But this management shift isn't particularly surprising in light of Ctrip taking a significant stake, and and as the two companies prepare to make the most of their partnership. As Chen stated in today's press release, Qunar and Ctrip together hope to "build a more robust travel eco-system in China and Bring long-term synergies and value to our shareholders."
"I wish the very best for the cooperation between Ctrip and Qunar," added Zhuang, "and believe that the potential for the two companies will be tremendous."
In the end -- and regardless of what the broader Chinese stock market is doing at any given moment -- that's why I think Qunar investors would be wise ignore these kinds of wide wings, and instead focus primarily on whether this new partnership bears fruit as expected.
