Shares of vacation rental company Airbnb dropped more than 13 percent on Wednesday after the company reported its strong quarterly results and weak fourth-quarter guidance.
The company reported third-quarter revenue of $2.9 billion. Revenue was up 29 percent year over year and was the company’s strongest quarter ever. Analysts had expected revenue to come in at $2.8 billion, according to Refinitiv. Airbnb, therefore, surpassed analysts’ estimates for third-quarter revenue. The company said that revenue growth was driven by stable growth in the Nights and Experiences booked by customers and increased average daily rates.
The company’s impressive third-quarter results, however, came with weak guidance. The company said it expects revenue to come in the range of $1.80 billion and $1.88 billion in the fourth quarter. The midpoint of its range is below analysts’ estimate of $1.85 billion, according to Refinitiv.
The company said that it expects “a continued, albeit choppy, recovery of cross-border travel to be a further tailwind to future results” as various countries around the world continue to recover from Covid lockdowns and deal with high levels of inflation and rising interest rates.
The company also highlighted the strong dollar. It cautioned that the strong dollar will reduce its international average daily rate. According to analysts at Evercore ISI, this was the “key negative” in Airbnb’s report. According to a Tuesday note, Evercore ISI maintained its outperform rating on the stock but removed Airbnb from their TAP Outperform list. “All in, we thought fundamental trends were resilient,” the analysts said.
Airbnb saw huge benefits from the boom in travel demand, as countries around the world continue to ease their lockdown and travel policies. In its release, the company said that the amount of new hosts on its platform has also increased.
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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