Airbnb Reports Mixed Q1 Results As Travel Rebounds; Street Sees 44.8% Upside

Airbnb (ABNB) reported mixed results in the first quarter as revenues increased but losses widened as travel made a comeback. The online marketplace for holiday rentals posted revenues of $887 million, up 5% year-on-year, beating consensus estimates of $717.8 million.

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However, the company saw losses widen in Q1 FY21 to $1.2 billion or a loss of $1.95 per share from $340.6 million or $1.30 per share in the same quarter last year. Analysts were expecting a loss of $1.05 per share.

Airbnb Co-Founder and CEO Brian Chesky said, “We are proud of our strong results. We surpassed 2019 revenue levels even though urban travel and cross-border travel, two of our strongest segments historically, have not yet recovered. We expect a travel rebound unlike anything we have seen before. Travel is coming back and Airbnb is ready.”

The growth in revenues was driven by higher average daily rates (ADR) and an increase in revenues in North America. The company’s bookings for nights and experiences business rose 13% year-on-year to 64.4 million while gross booking value (GBV) jumped 52% year-on-year to $10.3 billion.

ABNB expects that over the near term, there will be difficult year-on-year comparisons for GBV and bookings for Nights and Experiences as the company experienced a significant rise in booking cancellations in Q2 last year due to the pandemic. (See Airbnb stock analysis on TipRanks)

The company anticipates that while bookings for Nights and Experiences will be much higher compared to the same quarter last year, they will still be lower than Q2 FY19. ABNB expects GBV to be higher in the second quarter compared to Q2 FY19 due to the rise in ADR since the start of the pandemic.

Revenue forecast for Q2 is likely to be much higher than that of the same quarter last year as a result of the effect of the COVID-19. ABNB conceded that the company currently has “limited visibility for growth trends in the second half of 2021”.

While the company anticipates adjusted EBITDA margins to be lower in the first half of this year compared to the second half, it expects that adjusted EBITDA margins in Q2 will breakeven or be slightly positive.

Following the earnings, Oppenheimer analyst Jed Kelly reiterated a Hold on the stock. Kelly said in a research note to investors, “ABNB 1Q21 booking/revenue surpassed ’19 levels (~3 months ahead of schedule), due to strength in the US and with longer-terms stays (over 28 days). Impressive, considering minimal Int’l travel and European lockdowns, and clearly highlights the flexibility in ABNB’s business to recover the quickest from COVID-19. And more Europeans are becoming inoculated, setting up for a favorable domestic summer travel season.”

“The May 24 announcement will focus on simplifying the host/guest experiences. Platform currently has 5.6M listings, similar to 4Q, but site is experiencing higher traffic from recent brand campaigns. We raise our ‘22E revenue 13%; however, ABNB trades at a 1.9x EV/revenue premium to other disruptive internet marketplaces; therefore, we would wait for a better entry point,” Kelly added.

Overall, consensus among analysts is a Moderate Buy based on 12 Buys and 16 Holds. The average analyst price target of $196.55 indicates upside potential of around 44.8% from current levels.