Why Ctrip.com Shares Dropped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chinese Internet travel company Ctrip.com fell as much as 16% today on reports of an expansion of discounting.

So what: This morning Oppenheimer said that Ctrip would expand its coupon program to air tickets and the company's vice president confirmed reports. The price war between travel agencies is getting stronger and this will put more pressure on Ctrip's margins.

Now what: The stock wasn't cheap to begin with, so more margin pressure isn't good for investors. Shares now trade at 23 times earnings, and impact of another coupon program could be big. I don't think there's a reason to buy the stock today and would wait and see how margins play out in coming quarters.

Interested in more info on Ctrip.com? Add it to your watchlist by clicking here.

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The article Why Ctrip.com Shares Dropped originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Ctrip.com International. The Motley Fool owns shares of Ctrip.com International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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