Airbnb Beats 4Q Sales, Sees Booking Demand Picking Up; Shares Pop 13%

Shares of Airbnb surged 13.3% on Friday as the online vacation home rental marketplace posted better-than-expected quarterly sales and sees booking demand picking up. Shares dipped 2.2% in extended hours trading on Feb. 26.

Airbnb’s (ABNB) revenue dropped 22% to $859 million in the fourth quarter, but exceeded consensus estimates of $747 million. Meanwhile, the company reported a net loss per share of $11.24 in 4Q, which was wider than analysts’ expectations of a loss per share of $8.05. This was the result of a non-cash stock-based compensation expense of $2.8 billion in 4Q related to its initial public offering (IPO) in December.

Airbnb CEO Brian Chesky said, “Our performance in 2020 showed that Airbnb is resilient and inherently adaptable. Travel is coming back and we are laser-focused on preparing for the travel rebound.”

ABNB said that while the company expected FY20 revenue to drop by around 50% year-on-year, the actual decline was only 30% year-on-year with revenue of $3.4 billion. Fourth-quarter sales were modestly impacted by travel restrictions and lockdowns due to the second wave of the COVID-19 pandemic. The company had a gross booking value (GBV) of $5.9 billion in 4Q, down by 31% year-on-year.

The company’s adjusted loss before interest, taxes, depreciation and amortization however, narrowed to $21 million in 4Q from $276 million during the same period a year ago. This was due to ABNB’s efforts to reduce fixed and variable costs in 2020. (See Airbnb stock analysis on TipRanks)

Commenting on the first quarter of this year, ABNB said that the company expects the rate of its revenue decline to be less than in the previous quarter as bookings of vacation rental homes are picking up. The company did not provide financial guidance for FY21 due to the uncertainty of the COVID-19 pandemic.

Following the results, Credit Suisse analyst Stephen Ju raised the price target from $156 to $162 but kept a Hold rating on the stock. Ju said in a research note “Circumstances which could push us to take a more constructive stance on ABNB shares include the following: 1) faster than expected substitution effect from traditional hotels to alternative accommodations for the travel industry as a whole, 2) faster or meaningful share gains within the alternative accommodations category, 3) optionality from rising monetization through payments and/or advertising.”

The rest of the Street is cautiously optimistic on the stock with a Moderate Buy consensus rating based on 12 Buys, 20 Holds, and 1 Sell. The average analyst price target of $176.56 implies around 14.4% downside potential to current levels.