Trip.com shares plunged in Hong Kong trading after the Chinese travel giant reported a sharp decline in operating margins, despite robust fourth-quarter revenue growth. The company's adjusted EBITDA margin tumbled to 22% from 35% year-on-year, significantly worse than the 23% margin achieved in the same period last year. This margin contraction overshadowed a strong underlying performance, with net profit rising 88% to 4.28 billion yuan ($614 million) on 6.29 billion yuan revenue, up 16% sequentially. The margin drop comes as Trip.com invests heavily in expanding its international operations and domestic market share amid rising inbound travel to China.

Mizuho cut its price target on Trip.com ADRs to $79 from $82, citing lower industry valuations due to lingering AI risks, though it maintained an Outperform rating, citing strong travel trends. A potential regulatory headwind persists from an ongoing anti-monopoly probe by China's State Administration for Market Regulation, though Trip.com provided few new details. The brokerage argued the company was relatively insulated from AI disruption due to China's fragmented travel sector. Investors are now focused on whether the margin pressures can be reversed as Trip.com scales its international ambitions.