Airbnb’s (NASDAQ:ABNB) recent earnings report is a good indication that travel is back. Consumers want to move around again, and they are using Airbnb to do it. Business has been booming for the digital lodging marketplace, which has reported more than 100 million bookings during the first quarter of 2022. Rental rates are rising but so is ABNB stock. Now, with summer fast approaching, the company foresees more business ahead.
What’s Happening With ABNB Stock
Yesterday, Airbnb’s 2022 Q1 earnings report presented investors with a positive forecast for the year’s second quarter. It didn’t take long for ABNB stock to react accordingly. Shares rose steadily, and despite a slight dip this morning, they remain in the green by 3.6% at the time of writing. Before the earnings report, negative energy pushed ABNB down as investors sold off shares. Now, the positive momentum generated by the earnings report will likely boost ABNB further, helping to usher in a turnaround after a difficult month.
What was in the earnings report? Let’s take a closer look.
Why It Matters
Neither macroeconomic headwinds nor the ongoing Russian invasion of Ukraine have stopped Airbnb from demonstrating significant growth this year. The company reported revenue of $1.5 billion versus the $1.45 billion predicted by Wall Street. This represents an increase of 70% from last year’s revenue. Additionally, net loss for Airbnb has shrunk from $1.2 billion to $19 million. The company predicts that growth for the current quarter will range between $2.03 billion and $2.13 billion despite Wall Street’s estimate of $1.96 billion.
Airbnb recently revealed it had “30% more nights booked for the summer travel season than at the same time in 2019.” It also notes that gross booking value, the company’s metric for tracking host earnings, taxes and fees, has risen 67% for the year, coming it at $17.2 billion when Wall Street predicted $16.54 billion. Average daily rates have also risen 5% since last year’s Q1 report. Another interesting detail, as reported by CNBC, is that long-term stays of 28 days or more were the company’s “fastest-growing category by trip length compared to 2019.”
Wall Street is still mostly bullish on Airbnb. Andrew Boone of JMP Securities recently reiterated a “buy” rating for ABNB stock with a bullish price target of $215. Needham’s Bernie McTernan did the same, setting an even higher price target of $220. The platform’s analyst rating consensus is still that ABNB stock is a moderate buy. Some experts remain weary of the travel sector. While travel booking platform Expedia (NASDAQ:EXPE) has been falling since its own earnings report, Airbnb’s positive projections should reassure investors that travel is on the rebound.
What It Means
Of course there are still factors that could derail the travel sector’s resurgence. The threat of rising Covid-19 cases is ever present, and the crisis in Ukraine isn’t likely to cease anytime soon. It is important to note, however, that the growth it has demonstrated this year comes in spite of the omicron variant outbreak. Americans have proven that they want to travel again. That means Airbnb’s growth projections could indeed come to pass, sending ABNB stock up even more.
Prior to the earnings report, InvestorPlace contributor Bret Kenwell raised the following question: Can Airbnb stock rally 31% to $225 a share? The answer is yes, it absolutely can, if the current travel trends persist and further Covid-19 outbreaks do not pose any setbacks during the next quarter. Summer is coming, and with it, plenty of opportunity for Airbnb.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.