WEB Travel Group Ltd (ASX: WEB) shares have been hammered so far in October, with investors shaving more than 43% off the company's market value within the month.

Shares in the ASX travel stock closed the session on Wednesday at $4.16 per share, down more than 35% this year to date.

The sharp decline raises the question of whether WEB Travel is a bargain or a value trap. Let's dive into the details and see if this dip presents a buying opportunity for savvy investors.

Why are WEB Travel shares down?

Investors unloaded WEB Travel shares after the company issued a profit warning linked to its WebBeds business. This division now operates independently after the company spun off its online travel agency segment in September this year.

WEB's preliminary update for the first half of FY25 revealed weaker-than-expected profit margins, especially in Europe.

Management revised WebBeds' total transaction value (TTV) and revenue margins, projecting a decrease to around 6.4%.

This is down from the previously guided 7% at its annual meeting in August.

The company also reduced its preliminary underlying pre-tax margin for WebBeds to around 44%, down from its earlier guidance of 52%.

The cause of the downgrades? Well, as my colleague Bernd recently noted, it's partly due to the impact of one-off events like the collapse of German tour operator FTI Group and the Paris Olympics.

However, ongoing competitive pressures in Europe have added a structural dimension to the company's profit margin challenges.

What's more, Australian travel and tourism numbers haven't quite returned to their pre-pandemic levels just yet.

According to the Australian Bureau of Statistics (ABS), international arrivals were 1.74 million in September this year, below the 2.26 million peak in January 2020.

In August, short-term visitor arrivals were up 9% year over year to nearly 659,000, whereas total arrivals were up 7% to 1.6 million. Total departures increased 11%.

Meanwhile, on the domestic front, Aussies spent around 1% less time away on their holidays in FY24 but booked around 2% more trips in total.

Time will tell what the travel trends do from here.

What do analysts say?

The sharp share price drop has prompted a flurry of analyst activity, with opinions mixed on the stock's outlook.

WEB Travel stock is rated a buy from consensus, according to CommSec.

Goldman Sachs, for instance, immediately revised its earnings estimates for WEB Travel, cutting its FY25-27 forecasts for sales and earnings by up to 33%.

But despite the downgrades, Goldman retained a positive long-term view of WEB Travel shares, maintaining a buy rating on the stock.

Just one caveat: It did so with a revised price target of $6.70, down from $8.20.

This still implies a potential upside of nearly 50% from current levels.

Goldman believes WEB Travel will benefit from ongoing market consolidation and aims to reach $10 billion in TTV by FY30. The broker also sees a recovery in WebBeds.

We forecast WebBeds TTV growth of approximately 15% CAGR from $5 billion in FY25 to $10 billion in FY30, which should support a stable revenue margin trajectory.

Foolish takeaway

WEB Travel shares have had a rough October, dropping 43% in the month alone after a disappointing trading update for its WebBeds division.

But Goldman still sees an upside for the stock moving forward. This reinforces the importance of keeping a long-term view. Time will tell if this expectation is correct.