Airbnb Falls on Delta Warning Despite Reporting 300% Q2 Revenue Growth

Airbnb, Inc. (ABNB) reported stellar second-quarter results with revenue jumping 299% and narrower-than-reported losses, boosted by the relaxation of travel restrictions and increased vaccinations. However, shares fell 4.5% in after-hours trading on Thursday after the company warned about the increasing spread of the delta variant, which could hamper bookings in the future.

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Airbnb provides an online marketplace that connects hosts and guests for booking travel services and accommodation facilities worldwide. (See Airbnb stock charts on TipRanks)

Airbnb reported a quarterly loss of $0.11 per share, much lower than analysts’ estimated loss of $0.48 per share and much better than the prior-year quarter’s loss of $2.18 per share.

Additionally, revenue grew a whopping 299% to $1.33 billion and surpassed the Street’s estimates of $1.23 billion.

Revenue growth was attributed to a recovery in travel as countries relaxed their restrictions and a 41% increase in average daily rates (ADR) compared to the year-ago period to $161.

Additionally, the company stated that cross-border traveling and international travelers from fully vaccinated countries like the U.S. and parts of Europe drove the travel rebound.

Moreover, Q2 marked a significant growth of 320% year-over-year in gross booking volumes (GBV) to $13.42 billion, while Nights & Experiences Booked grew 197% year-over-year to 83.1 million.

Co-Founder and CEO Brian Chesky said, “We’re proud of our strong results this quarter, which again surpassed 2019 revenue levels. Travel is different than before, and because of our adaptable business model and continued product innovation to meet the changing needs of our guests, Airbnb is leading the travel rebound.”

Looking ahead, the company stated that due to the uncertainty surrounding the COVID-19 pandemic and related restrictions, it expects year-over-year comparisons to be volatile and nonlinear. Additionally, the company expects its Nights and Experiences Booked and GBV to decline sequentially.

That said, Airbnb expects the third quarter to be the strongest revenue-generating quarter, backed by a strong GBV backlog created for the peak travel season.

In response to the quarterly performance, Stifel Nicolaus analyst Scott Devitt maintained a Hold rating on the stock with a price target of $145, implying 4.1% downside potential to current levels.

The analyst notes that Airbnb has established itself as a unique global platform for lodging and has grown rapidly since its founding in 2008 to reach $38 billion in GBV in 2019.

Devitt added, “The company’s global platform, customer and supply relationships, and strong brand affinity position the company to achieve an attractive long-term growth and margin profile. The market has awarded the company a premium valuation to reflect the company’s positioning.”

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 13 Buys versus 13 Holds. The average Airbnb price target of $170.96 implies 13.1% upside potential to current levels. Shares have gained 4.5% over the past year.