Trip.com (NASDAQ: TCOM) Jumps 10% In Two Sessions

Even though coronavirus cases in the US are still surging in many states and much-awaited reopenings are being rolled back, stocks have continued to see a strong bid in recent weeks. There has been much head-scratching as to how this can be with reports of up to half the US population being unemployed, but there we are. Stocks like Amazon (NASDAQ: AMZN), Apple (NASDAQ: AAPL), and Netflix (NASDAQ: NFLX) all hit fresh all-time highs in Monday’s session, even as new coronavirus cases hit all-time highs too.

To be sure, these are the headline grabbers, and not every stock is crushing it right now. Those outside of the tech or e-commerce industries may have seen some kind of recovery but not many are back above pre-COVID levels let alone at all-time highs. Some names, like those in the cruise ship industry and the airlines, are particularly susceptible to a second wave and have already sold off hard again over the past month. Others like Trip.com (NASDAQ: TCOM) have looked a little more nervous but are still managing to lock in impressive gains.

Chinese Driven Hype

With Monday’s session in the mix, shares of the Chinese owned travel management service were able to cap off a 10% jump in two days. This was particularly promising for investors who might have been growing unsure about the stock’s ability to keep the rally going. From the first week of June, which was the high water mark of their recovery from Q1, shares had sold off more than 15% as investors’ fears grew about a second wave and the consequences for anything travel related.

But China had other ideas and started the week off strong, with multiple Chinese stocks like Baidu (NASDAQ: BIDU) and JD.com (NASDAQ: JD) having their best day in weeks as the broader Chinese stock market had its best day in more than a year. Many on Wall Street weren’t sure about the reasons for the big jump but some fingers were pointed at the Chinese state-owned media’s role in building hype among the public of a continued recovery in equities. One thing is clear, not many were asking too many questions and investors were more than happy to enjoy the green day that filtered through to European and US markets.

If the Chinese recovery can continue to gain pace, Trip.com shares are well-positioned to continue their own recovery. In late May, Nomura upped their rating on the stock to Buy from Neutral, on the basis of a faster than expected general recovery driving a faster than expected travel industry recovery. Management had warned of a drop in Q2 revenue of up to 77% year on year which though shocking isn’t all that surprising given that upwards of 40% of their Q2 revenue last year came from international travel. So there had been plenty of downside already baked into last quarter’s lows which may still need to be reversed.

Travel Stocks Still Nervous

Like with many travel-related stocks in the US, American Airlines (NASDAQ: AAL), and Royal Caribbean Cruises (NYSE: RCL), investors getting involved over the summer will need a solid nerve to ride out any short term volatility which is sure to appear. Trip.com has already rallied 50% from the lows of Q1, fallen 15% from that high, and now rallied 12% back up.

Shares had brought solid momentum with them into 2020, before the coronavirus pandemic really kicked off and were up more than 30% from October through January. It remains to be seen if they can reclaim those levels but if hopes for a fast economic recovery, domestically and internationally, continue to build, even as cases surge, the odds are in their favor.