Trip.com Plummets 18% on Antitrust Probe as Regulators Target Market Dominance

Summary
• Trip.com (TCOM) slumps 17.86% intraday to $62.16, its lowest since 2023
• SAMR investigation triggers securities fraud lawsuits and 6.5% Hong Kong-listed drop
• Expedia (EXPE) lags 4.21% as travel sector faces regulatory crosshairs

Market turbulence grips the travel sector as Trip.com’s 18% selloff reverberates across global markets. The Chinese antitrust probe has triggered a cascade of legal and investor concerns, with the stock trading near its 52-week low of $51.35. Intraday volatility has pushed the stock to a 14-month trough, testing critical support levels amid regulatory uncertainty.

Regulatory Scrutiny Sparks Sharp Selloff in Trip.com
Trip.com’s 18% collapse stems from a dual blow: China’s State Administration for Market Regulation (SAMR) launched an antitrust investigation under the Anti-Monopoly Law, while U.S. law firm Frank R. Cruz announced a securities fraud probe. The SAMR probe alleges monopolistic practices, including alleged abuse of market dominance in online travel bookings. The company’s acquisition of Qunar and strategic investments in Tongcheng and Elong have drawn regulatory ire, with past enforcement actions against tech giants like Alibaba and Meituan setting a precedent. Immediate investor panic followed, with Hong Kong shares dropping 6.5% and U.S. intraday lows reflecting a 20%+ valuation erosion.

Tour & Travel Sector Under Pressure as Regulators Target Market Leaders
The travel sector’s regulatory tailwinds have turned into headwinds, with Expedia (EXPE) down 4.21% as investors extrapolate Trip.com’s antitrust risks to global peers. While Trip.com’s 18% drop dwarfs Expedia’s decline, the broader sector faces renewed scrutiny over pricing power and market dominance. China’s regulatory campaign, which previously targeted tech platforms, now extends to travel giants as outbound tourism rebounds to pre-pandemic levels. The sector’s vulnerability is amplified by seasonal demand volatility ahead of the Lunar New Year travel rush.

Options Playbook: Capitalizing on Volatility Amid Regulatory Uncertainty
• MACD: 1.44 (bullish divergence), RSI: 56.3 (neutral), 200-day MA: $66.56 (below current price)
• Bollinger Bands: $69.23 (lower band) vs. $62.16 (current price), signaling oversold conditions

Technical indicators suggest a bearish near-term bias, with key support at $61.84 (200-day MA) and resistance at $70.12 (30-day MA). The RSI hovering near 56 indicates potential for a rebound, but the MACD’s positive divergence hints at lingering short-term weakness. With the stock trading near its 52-week low, options strategies should focus on downside protection and volatility plays.

Top Options Picks:
• TCOM20260220P60 (Put, $60 strike, Feb 20 expiration):
- IV: 40.63% (moderate), Leverage: 31.27%, Delta: -0.34, Theta: -0.016, Gamma: 0.0447
- Turnover: 952,132 (high liquidity)
- Payoff at 5% downside ($59.05): $1.05 per contract
- This put offers a balance of leverage and liquidity, ideal for capitalizing on a potential 5% drop while benefiting from high gamma for price sensitivity.

• TCOM20260220P65 (Put, $65 strike, Feb 20 expiration):
- IV: 43.45% (high), Leverage: 13.11%, Delta: -0.57, Theta: -0.004, Gamma: 0.0448
- Turnover: 290,239 (solid liquidity)
- Payoff at 5% downside ($59.05): $6.00 per contract
- The $65 put provides higher upside in a severe drop scenario, though its lower theta suggests less time decay risk. High gamma ensures responsiveness to price swings.

Action Insight: Aggressive short-sellers may target TCOM20260220P60 for a 5% downside play, while conservative investors should monitor the $61.84 support level. A break below $61.40 (intraday low) could trigger a 200-day MA test.

Backtest Trip.com Stock Performance
Trip.com (TCOM) experienced a significant intraday plunge of approximately 18% in 2022, primarily due to the impact of the COVID-19 pandemic on the travel industry. However, the stock has shown resilience and managed to recover of its losses over the course of the year. As of the latest data, TCOM has rebounded from its 2022 low and is currently trading higher than the trough witnessed during the pandemic.1. Impact of the Pandemic: The travel industry, including companies like Trip.com, was severely affected by the pandemic-induced lockdowns and travel restrictions. This led to a significant drop in revenue and profits for TCOM in 2022.2. Stock Performance Recovery: Despite the initial shock, TCOM's stock price has recovered , indicating investor confidence in the company's ability to adapt to the post-pandemic market. The company's strategic focus on domestic travel demand, as highlighted by the "staycation" trend, has likely contributed to its performance recovery.3. Financial Performance: TCOM's financial results for Q3 2022 show a positive trend, with non-GAAP EPS of $0.22, an increase of $0.04 from the previous year, and revenue of $968 million, surpassing estimates by $58.05 million. This indicates a strong revenue recovery, which has likely supported the stock's upward movement.4. Market Sentiment: The overall sentiment towards TCOM has been positive, with recent reports highlighting the company's strategic moves, such as the repurchase of convertible notes, which could have boosted investor confidence.In conclusion, while TCOM faced a challenging period in 2022, its performance has improved significantly from the intraday low. The company's strategic initiatives and financial recovery have likely contributed to this upward trajectory, reflecting investor confidence in its future prospects.

Regulatory Storm Intensifies: Position for Volatility or Exit on Breakdown
Trip.com’s 18% plunge underscores the regulatory risks facing market-dominant travel platforms. While technical indicators suggest a potential rebound from oversold levels, the SAMR probe and securities fraud lawsuits cast a long shadow. Investors should prioritize liquidity and volatility-based strategies, with the $61.84 support level and $70.12 resistance zone as critical decision points. Sector leader Expedia’s 4.21% drop highlights the sector’s vulnerability, but Trip.com’s unique regulatory exposure makes it a high-risk, high-reward play. Watch for $61.40 breakdown or regulatory updates to dictate next steps.