What happened
Week to date, shares of Trip.com (TCOM 1.02%) were down 11% as of 11:08 a.m. ET on Friday, according to data provided by S&P Global Market Intelligence.
The leading travel platform provider in China reported strong growth for the second quarter, driven by surging domestic and international travel demand. With Chinese travel still in recovery mode, the company's prospects look solid.
There doesn't appear to be a good reason for the stock to have sold off based on Trip.com's quarterly performance. Shares had been surging in the weeks leading up to the earnings release, so it appears to be normal volatility given the stock's historical trading pattern.
NASDAQ: TCOM
Key Data Points
So what
Revenue grew 180% year over year in Q2 and was up 29% compared to the same period in 2019. Trip.com is operating in an attractive market: China has experienced strong growth in outbound travel for many years (with the exception of the pandemic).
CEO Jane Sun believes Trip.com is poised to take the lead in the industry's recovery, noting an "abundance of job opportunities alongside our esteemed business partners."
Given these comments and strong revenue growth, the company's momentum doesn't seem to be fully appreciated by the market.
Now what
The post-earnings dip could be a good buying opportunity for investors looking for exposure to the recovery in travel. Long-term industry prospects are favorable, and Trip.com's stock trades at an attractive forward price-to-earnings ratio of 17, which seems on the low side for a business with this much potential.
The rebound to pre-pandemic demand levels is providing a lot of opportunity for leading travel platforms to reach new customers and expand their addressable market.
