Regulatory probe and lawsuits put Trip.com Group in focus

Trip.com Group (TCOM) is back in the spotlight after Chinese regulators opened an anti monopoly investigation into its AI price adjustment tool, followed by multiple U.S. securities class action lawsuits alleging inadequate disclosure of regulatory risks.

The regulatory probe and class action headlines have coincided with a sharp shift in sentiment, with a 90 day share price return showing a decline of 32.23% and a year to date share price return matching that move. However, the 3 year total shareholder return of 34.72% and 5 year total shareholder return of 31.54% indicate that longer term investors have still seen gains.

If you are weighing this regulatory story against other opportunities in the market, it can help to compare Trip.com Group with AI focused travel or platform peers using a dedicated screener such as 66 profitable AI stocks that aren't just burning cash

With Trip.com trading at US$50.48, showing an intrinsic discount of 66.13% and a 50.28% discount to analyst targets, the key question is whether this reflects a genuine mispricing or whether markets are already factoring in future growth risks.

Most Popular Narrative: 34% Undervalued

The most followed narrative pegs Trip.com Group's fair value at $76.21, well above the last close of $50.48. This frames the recent sell off as a valuation gap rather than a verdict on the business.

The rapidly expanding middle class and rising disposable income across Asia Pacific, which is fueling higher travel demand and international tourism, positions Trip.com Group to capture robust, long term revenue growth across both inbound and outbound travel markets. Accelerating consumer adoption of digital channels and mobile first travel planning, with app originated bookings already comprising 70% of global orders, supports continued high volume transaction growth and increasing operational efficiencies, likely benefiting both revenue and net margins.

Curious what earnings profile fits this valuation gap, and how much profit compression is baked in by 2029? The narrative leans on healthy revenue expansion, a thinner margin profile, and a higher future earnings multiple to bridge today’s price to that fair value.

Based on this narrative, the model discounts Trip.com Group's future cash flows at 8.28% and assumes solid top line expansion alongside lower profitability. It then applies a richer P/E multiple than today to those future earnings. That mix of growth, margin pressure, and valuation re rating is what underpins the $76.21 figure.

Result: Fair Value of $76.21 (UNDERVALUED)

However, this depends on competitive pressure and regulatory or legal outcomes not being more severe than expected, as both could hit margins and reset earnings assumptions.

Next Steps

With both risks and rewards in play, sentiment around Trip.com Group is understandably mixed. It makes sense to move quickly and test the data against your own expectations, starting with the 5 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.