Airbnb (ABNB) Stock Trades Up, Here Is Why

Adam Hejl /
2024/01/26 2:59 pm EST

What Happened:

Shares of online accommodations platform Airbnb (NASDAQ:ABNB) jumped 5% in the afternoon session after the company revealed plans to increase fees charged to guests for cross-currency bookings. This means that whenever a guest pays for a booking using a different currency from the one set by the host, there would be an additional fee of as much as 2%. The company noted that the additional fee could result in a guest service fee of up to 16.5% of the booking subtotal. 

More important than the details of the fees associated with cross-currency bookings is the bigger-picture international volume opportunity. This news is likely increasing bullishness among investors that Airbnb is focused on expanding into new markets to meet the growing demand for its offerings. Notably, during the Q3'2023 earnings call, management highlighted the improved momentum in the international market as cross-border nights booked grew 17% compared to the previous year. In a letter to shareholders, the company added, "As international travel continues to recover, we're building greater momentum for Airbnb in under-penetrated markets. In Asia Pacific, our business has fully recovered to pre-pandemic levels, with gross nights growing 23% in Q3 2023 compared to Q3 2019. China outbound travel increased over 100% in Q3 2023 compared to a year ago. Smaller Asia Pacific markets such as Taiwan, the Philippines, Thailand, Hong Kong, and Indonesia all experienced year-over-year growth above 30% for gross nights booked on an origin basis."

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What is the market telling us:

Airbnb's shares are quite volatile and over the last year have had 16 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 9 months ago, when the stock dropped 10.6% on the news that the company reported first quarter results that beat analysts' gross bookings, revenue, earnings per share (EPS), and free cash flow estimates. However, room nights, revenue and adjusted EBITDA guidance for the next quarter came in below Consensus, with the weak EBITDA guidance attributed to "changes in the expected timing of marketing spend relative to the prior year." Additionally, full-year 2023 EBITDA margin was projected to be similar to 2022, which was slightly below expectations and shows that the company will not be getting operating leverage on expenses for the year. Overall, it was a negative quarter for the company given the outlook for the business.

Airbnb is up 11.7% since the beginning of the year, and at $150.09 per share it is trading close to its 52-week high of $153.33 from July 2023. Investors who bought $1,000 worth of Airbnb's shares at the IPO in December 2020 would now be looking at an investment worth $1,038.

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