Yes, the world comes to an end simply because CTRP has been a momentum stock with an extremely rich p/e ratio, far outpacing it's projected growth rate. Stocks priced for perfection can't afford to have anything go wrong, otherwise you see dramatic p/e multiple deflation as the market realizes the growth rate will slow. Just consider what the price of CTRP will be if it's p/e falls to it's growth rate, which is closer to 20-25%. Substantially lower prices from here.
There is no sign whatsoever that this market growth rate is going to decline in the foreseeable future.
The current growth rate is in the 40 to 45% range.
A fall to a 20-25% growth rate is highly unlikely - would need a massive credit tightening by the government - and that is not on the cards - the government is intent on stimulating domestic consumption.
The airlines paid 5% commission, now they'll pay 3%, that's a 40% cut, that is the margin on airline tickets will be 40% lower. If that's not a big deal, but do you think is a big deal? What's more, ctrp normally sells tickets or hotel rooms more expensive than direct sales, and companies are ramping up direct sales force, isn't that a problem? Margin will shrink dramatically going forward, that's why the stock is falling hard, but there is much more to come. The fair value for CTRP is around $10 if you take PCLN as an example.
That is a good point, it will hurt the competition just as much. However, that does not mean that c-trip wins, they and their competition could all lose profit margin, it could be a lose-lose situation.