Airbnb (NASDAQ: ABNB) is due to report its fourth-quarter earnings results after the bell on Tuesday, with all eyes on the company’s ability to capitalize on apparently resilient travel demand.
Street consensus for EPS and the revenue is 0.27 USD or 1.86 billion USD. Analysts have revised EPS estimates upwards 6 times in the 90 days ahead of earnings, while revenue expectations are up raised 10 times. The company has beaten bottom-line expectations in 6 of the past 8 quarters, beating revenue estimates 7 times over that period.
With the notable exception of Expedia ( EXPE ), travel operators reported continued strong demand for travel among US consumers despite escalating layoffs and continued inflationary pressure on US wallets. For example, Hilton Worldwide Holdings (HLT) posted a strong gain following its report the week before that signaled travel demand even above pre-pandemic levels. Similarly, airlines and leisure operators such as Royal Caribbean Cruises (RCL) have touted continued spending on cruises among American consumers.
A team of analysts indicated that they are “most constructive on Q4 ABNB” due to expectations of strong traffic trends and estimates of margin growth. In addition, the team expects the online accommodation platform to continue to push hotel market share.
“We believe that ABNB in our coverage is best positioned to withstand the economic slowdown due to greater affordability, the ability to provide additional income, the combined benefit of more domestic travel and the fact that travel would enter the slowdown with already low levels of spending,” the team wrote. “We expect ABNB to continue to take market share from competitors.”
However, not all analysts are optimistic. Concerns about valuation, high booking expectations and room supply are common among analysts advising a Hold rating. According to Seeking Alpha polls, Hold is currently the most popular stock rating ahead of the earnings update.
The valuation was highlighted by a number of analysts given the stock’s hot run following the earnings release. Shares of the San Francisco-based travel platform have jumped more than 30% since the start of 2023. That streak has caused caution even among analysts who are optimistic. Wells Fargo, for example, maintained a Buy rating ahead of the results, but noted that “sentiment on near-term fundamentals among online travel names remains largely positive” and that expectations ahead of the sector’s earnings results remain “elevated.”
In addition, JMP Securities noted room supply concerns to sustain a return to 2019 travel demand levels.
“With international and city travel continuing to recover towards 2019 levels, we believe investors will see whether ABNB has added enough supply to capture the returning demand in these areas,” equity analyst Nicholas Jones told clients. “Furthermore, housing affordability and home maintenance costs are likely to weigh on buyers looking to purchase rental properties, which may limit ABNB’s ability to add additional supply.”
The company’s guidance will also be key given the impact of comments on slowing growth in stock bookings following the company’s November earnings report. Other influences worth mentioning will be the timing of the fourth quarter and the stronger dollar, a factor noted by Expedia as an unfavorable trend in its recent earnings report.
Shares of Airbnb ( ABNB ) rallied 5.75% on Monday, adding to a strong start to 2023.
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