Airbnb’s Outstanding Q2 Results Fail to Cheer Investors

Airbnb’s (NASDAQ: ABNB) outstanding second quarter 2022 results have failed to cheer investors. This is because the California-based company does not expect to report such strong results in the third quarter.

Following abnormal demand after two years of COVID-induced restrictions, the company has projected stable growth in the third quarter. This made ABNB stock lose 6% in the pre-market trading session on Wednesday, after closing 4.6% up on Tuesday.

A Snapshot of Airbnb’s Q2 Performance

The online marketplace operator reported earnings of 56 cents per share, surpassing the Street’s estimate of 45 cents per share. The company had registered a loss of 11 cents per share in the same quarter last year.

Revenues rose 58% year-over-year to $2.1 billion, driven by a 25% rise in Nights and Experiences Booked to a record 103.7 million. Gross booking value (GBV) rose 27% to $17 billion, and average daily rates (ADR) jumped 1% to $164.

Adjusted EBITDA more than tripled year-over-year to $711 million, while free cash flow stood at $795 million.

Airbnb Issues Q3 Guidance

For the third quarter, Airbnb expects revenue to range between $2.78 billion and $2.88 billion, compared to the consensus estimate of $2.77 billion. It expects adjusted EBITDA in the third quarter to be the highest so far.

ADRs and GBV are anticipated to rise slightly year-over-year, and the growth of Nights and Experiences Booked is expected to be stable.

Is Airbnb a Good Stock to Buy Now?

Analysts have mixed feelings about Airbnb stock and there are multiple reasons behind it.

Following the company’s results, Thomas Champion of Piper Sandler (NYSE: PIPR), said, “Airbnb’s growth is decelerating due to macro friction in the U.S. and with Asia yet to rebound post-COVID. Additionally, the company’s share repurchase program just two years post-initial public offering (IPO) suggests a quicker business maturation than expected.”

While maintaining a Hold rating on the stock, Champion has lowered his price target to $121 from $174 (4% upside potential).

However, Colin Sebastian of Robert W. Baird has a Buy rating on Airbnb. Sebastian is bullish on the stock for the long term and expects the company’s market share and margins to rise. He has, however, reduced his price target to $140 from $155 (20.3% upside potential)

Meanwhile, Stephen Ju of Credit Suisse (NYSE: CS), who has lowered the price target on the stock to $165 (41.8% upside potential) from $190 and retained a Hold rating, said, “Airbnb continues to benefit from a cyclical recovery in areas of historical strength, including urban and cross-border travel. The company is not supply constrained and its recent initiatives such as Categories and I’m Flexible are helping to point demand to available supply.”

Overall, on TipRanks, ABNB stock has a Moderate Buy consensus rating based on 13 Buys, 17 Holds, and one Sell. ABNB’s average price target of $142.14 implies 22.2% upside potential.

ABNB’s Website Traffic Trends Hinted at a Strong Second Quarter

According to TipRanks’ Website Traffic Tool, Airbnb’s website traffic registered an almost 48% rise in global visits during the second quarter, compared to the first quarter. Website visits on the desktop grew 2.5% quarter-over-quarter and traffic to the company’s mobile app climbed nearly 70%.

Interestingly, TipRanks’ Website Traffic Tool already hinted at Airbnb’s solid second-quarter results.

Is Airbnb a Long-Term Investment?

Airbnb has been continuously innovating and introducing new products to boost its growth. There is no other platform like Airbnb, which makes competition almost nil. Further, travel demand is increasing despite rising inflation. It will only be a matter of time before ABNB stock gains momentum and surpasses pre-pandemic levels. All these factors make the stock a good long-term investment bet.

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