Published - February 15, 2023 @ 11:50 AM (EET)
Shares of Airbnb Inc. (NASDAQ:ABNB) jumped as much as 12% in extended trading Tuesday after the travel giant gave a better-than-expected outlook for revenue in the first quarter, signaling that travel demand remains robust even after a record year for growth in 2022.
In the three months ending in March, Airbnb expects sales of between $1.75 billion to $1.82 billion, easily topping analysts' estimates of $1.68 billion.
For its fourth quarter, the home-sharing company posted revenue of $1.90 billion, up 24% from the year-ago period and ahead of the company's guidance range between $1.8 billion and $1.88 billion. Profits came in at 48 cents a share, nearly twice the Street consensus at 25 cents.
Elsewhere, bookings for nights and experiences were up 20% in the quarter, supporting a 20% jump in gross booking value to $13.5 billion, while volume in the full fiscal year came in at $63.2 billion, up 35% year-over-year.
Revenue for the full year 2022 was up 40% from 2021 to $8.40 billion.
WHY IT MATTERS
Recently, guests have criticized rising prices that could include various fees after rates increased by more than 35% during the COVID-19 pandemic.
Historically one of the least busy and expensive quarters for travel services, Airbnb disclosed an average daily rate of $152.81 in the fourth quarter.
However, in addressing the issue, executives said their next move would be due reduce average prices while offering more information to hosts when they set prices.
As the pandemic wreaked havoc around everyday work and lifestyle, Airbnb has been a significant beneficiary, recording its highest revenue and marking its most profitable quarter from July to September, spurred by pent-up travel demand after two years of restrictions.
In a letter to shareholders, the company said,
"looking forward to 2023, we're seeing strong demand in Q1, indicating that consumer confidence to travel remains high."
NOW WHAT
Airbnb's travel booking services differ from hotel chains and cruise ship stocks in some critical ways in that many people use the platform for longer-term stays rather than quick weekend getaways.
Thus, implying more stability for sales growth during a sharp economic downturn, Wall Street pushed the stock's valuation up to reflect the operating advantages.
The stock is priced at nearly ten times sales compared to a low of just over six times in late 2022.
