What Happened:
Shares of online accommodations platform Airbnb (NASDAQ: ABNB) jumped 5.45% in the afternoon session after New York City agreed to postpone until September 5, 2023 the enforcement of a new law requiring hosts of short-term rentals to register for an operating license. This delay provides relief to Airbnb and the New York City hosts, after they had filed a lawsuit claiming the regulations were complex and violated privacy rights. The online accommodation company called for a more collaborative approach to find a solution that works for everyone.
What is the market telling us:
Airbnb's shares are quite volatile and over the last year have had 30 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 previous big move was about one month ago, when the company 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 will be similar to 2022, which is slightly below expectations and shows that the company will not be getting operating leverage on expenses this year. Overall, it was a negative quarter for the company given the outlook for the business.
Airbnb is up 46.2% since the beginning of the year, but at $124.14 per share it is still trading 11% below its 52-week high of $139.42 from February 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 $857.82.
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