Trip.com's Q1 Earnings: A Catalyst for Long-Term Growth in Global Travel

The travel sector’s post-pandemic rebound has created a rare opportunity for investors to capitalize on undervalued stocks with structural advantages. Among the standouts is Trip.com Group (NASDAQ: TCOM, HKEX: 9961), which delivered a Q1 2025 earnings report brimming with signals of sustained demand, robust cash reserves, and a strategic playbook to dominate the global travel landscape. For investors seeking exposure to secular growth in travel, this is a company worth buying now—and holding for the long term.

The Q1 Performance: A Triumph of Diversification and Scale

Trip.com’s Q1 2025 results underscore its unmatched ability to navigate a fragmented recovery. Total revenue surged 16% year-over-year to $1.91 billion, driven by cross-border travel’s explosive rebound. Key highlights include:

• International OTA reservations up over 60% YoY, fueled by China’s easing outbound travel restrictions and the company’s global footprint across brands like Ctrip, Qunar, and Skyscanner.
• Inbound travel bookings soaring 100% YoY, reflecting Trip.com’s dominance in attracting international tourists to Asia—a market still undervalued by many analysts.
• Outbound bookings exceeding pre-pandemic levels by 120%, signaling pent-up demand from Chinese travelers.

While non-GAAP earnings per share (EPS) missed estimates by 4 cents due to one-time operational costs, the top-line growth and cash reserves ($12.8 billion) suggest this is a temporary hiccup, not a trend. Management’s focus on AI-driven efficiency and localized services—critical to reducing costs and boosting margins—provides a clear path to profitability recovery.

Why the Stock is Undervalued: Cash, Buybacks, and Market Share

Trip.com’s valuation metrics scream opportunity for investors. With a P/E ratio of 30.48 and a Price/Sales ratio of 6.54, the stock trades at a discount to peers like Expedia (EXPE) and Booking Holdings (BKNG), despite its stronger cash position and geographic diversification.

Three key factors justify a “buy” stance:
1. $12.8 billion in cash reserves provide a war chest to acquire niche players, invest in AI tools, or expand into emerging markets.
2. $84 million in share buybacks this quarter signal confidence in the stock’s undervaluation and align with a shareholder-friendly strategy.
3. Structural dominance in China’s outbound travel market—where no competitor matches Trip.com’s scale or brand recognition—positions it to capture a rising tide of discretionary spending as global borders reopen fully.

The Long-Term Play: Global Travel’s Next Decade

Trip.com isn’t just riding a post-pandemic wave; it’s betting on secular trends that will define the next decade:
- Cross-border travel’s renaissance: With China’s outbound market projected to grow 15% annually through 2030, Trip.com’s platform advantage (handling 70% of Chinese international bookings) is a moat.
- Domestic tourism resilience: Even as inflation pressures rise, discretionary travel spending remains sticky, especially in high-income Asian markets where Trip.com’s packaged tours and corporate travel divisions shine.
- AI-driven cost efficiency: The company’s investments in AI to streamline bookings, pricing, and customer service could reduce operating costs by 10-15% over the next three years—a game-changer for margins.

Risks, But Not Dealbreakers

Skeptics will cite macro risks: currency fluctuations, regulatory hurdles in China, and competition from low-cost aggregators. Yet Trip.com’s diversified revenue streams (no single segment accounts for more than 40% of revenue) and $12.8 billion war chest mitigate these concerns. Meanwhile, its share price dip post-Q1 (down 1.8% in after-hours trading) offers a buying opportunity at a 15% discount to its 52-week high.

Conclusion: A Buy at These Levels

Trip.com’s Q1 results are a catalyst for long-term growth, not a cautionary tale. With international bookings surging, cash reserves bulging, and a shareholder-friendly buyback program underway, this is a stock primed to outperform as global travel demand normalizes.

Investors should act now:
- Buy TCOM for exposure to Asia’s travel boom.
- Hold for the long term, as cross-border travel’s recovery and AI efficiencies will compound value over the next five years.

The world is reopening—and Trip.com is the platform best positioned to profit from it.