Airbnb (ABNB) stock is rising, here’s why

what happened:

Shares of online lodging platform Airbnb (NASDAQ:ABNB) rose 5% in afternoon trading after the company announced plans to increase the fees it charges guests for cross-currency reservations. This means that if a guest pays for a reservation using a different currency than the one set by the host, there will be an additional fee of up to 2%. The company noted that the surcharge could result in a guest service fee of up to 16.5% of the booking subtotal.

More important than the fee details associated with cross-currency bookings is the opportunity for greater international volume. The news likely reinforces the bullish view among investors that Airbnb is focused on expanding into new markets to meet growing demand for its services. In particular, during the third quarter 2023 financial results conference, management emphasized that momentum in the international market is improving, with cross-border accommodation bookings increasing 17% year-on-year. “As international travel continues to recover, we are building further momentum for Airbnb in underpenetrated markets. In Asia Pacific, our business has fully returned to pre-pandemic levels,” the company said in a letter to shareholders. “We are recovering and the total number of overnight stays is decreasing,” he added. Q3 2023 increased by 23% compared to Q3 2019 Outbound travel to China increased by more than 100% year-on-year in Q3 2023 Asia-Pacific countries including Taiwan, Philippines, Thailand, Hong Kong, and Indonesia All small markets are up year over year – more than 30% annual growth in total nights booked on an origin basis. ”

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What the market is telling us:

Airbnb’s stock price has been extremely volatile, increasing more than 5% 16 times in the past year. In that context, today’s moves indicate that the market views this news as meaningful but not something that will fundamentally change the perception of the business.

The biggest move we wrote about last year was nine months ago, when we broke the news that the company announced first-quarter results that beat analysts’ total revenue, revenue, earnings per share (EPS) and free cash. As a result, the stock price fell 10.6%. Estimation of flow rate. However, room nights, revenue, and adjusted EBITDA guidance for the next quarter were below consensus, with the weaker EBITDA outlook attributed to “changes in the expected timing of marketing spend compared to the prior year.” Additionally, his full-year 2023 EBITDA margin was expected to be similar to his 2022, which is slightly lower than expected and indicates that the company will not be able to gain operating leverage against expenses in the current year. I am. Overall, it was a negative quarter for the company considering the business outlook.

Airbnb is up 11.7% year-to-date, trading at $150.09 per share, close to its 52-week high since July 2023 of $153.33. Investors who bought $1,000 worth of Airbnb stock in the December 2020 IPO are now looking at investing $1,038 worth.

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