Airbnb earnings preview: Can resilient travel trends sustain the stock’s 2023 surge?
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Airbnb (NASDAQ:ABNB) is due to post its Q4 earnings results after the bell on Tuesday with all eyes on the companyâs ability to capitalize on apparently resilient travel demand.
The Street consensus for EPS and revenue stand at $0.27 and $1.86B, respectively. Analysts have revised EPS estimates upward 6 times in the 90 days ahead of earnings, while revenue expectations have been raised 10 times. The company has beaten bottom line expectations in 6 of the past 8 quarters, rising above revenue estimates 7 times in that span.
With the notable exception of Expedia (EXPE), travel operators have reported largely positive results and still-robust travel demand among US consumers despite escalating layoffs and persistent inflationary pressure on American wallets. For example, Hilton Worldwide Holdings (HLT) notched a strong gain following its report in the week prior which signaled travel demand above even pre-pandemic levels. Similarly, airlines and leisure operators like Royal Caribbean Cruise (RCL) have touted a continued spend on getaways among US consumers.
A team of analysts indicated they are âmost constructive on ABNB into 4Qâ due the expectation of strong traffic trends and upside to margin estimates. Additionally, the team expects the online lodging platform continues to eat into market share held by hotels.
âWe believe ABNB is best positioned in our coverage to endure an economic slowdown due to greater affordability, ability to provide supplemental income, mix benefit from more domestic travel, and the fact that travel would be entering the slowdown at already-depressed spending levels,â the team wrote. âWe expect ABNB to continue taking market share from competitors.â
That said, not all analysts are bullish. Concerns on valuation, lofty bookings expectations, and the supply of rooms are common among analysts advising a Hold rating. According to Seeking Alpha surveys, Hold is currently the most popular rating on the stock ahead of the earnings update.
Valuation has been highlighted by a number of analysts given the stockâs red-hot run into the earnings release. Since the start of 2023, the San Francisco-based travel platformâs stock has popped over 30%. That run has aroused caution among even bullish analysts. Wells Fargo, for example, maintained a Buy rating in a note ahead of the results, but noted that âsentiment on near-term fundamentals among the online travel names remains largely positiveâ and that expectations ahead of the earnings results in the sector remain âelevated.â,
Additionally, JMP Securities highlighted concerns on the supply of rooms to sustain a return to 2019 levels of travel demand.
âWith international and urban travel continuing to recover toward 2019 levels, we believe investors will look to see if ABNB has added sufficient supply to capture the returning demand in these areas,â equity analyst Nicholas Jones told clients. âFurther, housing affordability and cost of home maintenance is likely to weigh on buyers looking to purchase rental properties, which may limit ABNBâs ability to add additional supply.â
The companyâs guidance will also be key given the impact of commentary on slowing bookings growth on the stock after the companyâs November earnings report. Other impacts of note will be Q4 weather and the stronger dollar, a factor that Expedia noted as an adverse trend in its recent earnings report.
Shares of Airbnb (ABNB) rallied 5.75% on Monday, adding to a strong start to 2023.
Read Seeking Alpha contributor Stocks and Savingsâ expectations for the earnings report.