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Airbnb shares fall after the report. What are the prospects

Airbnb, stock, Airbnb shares fall after the report. What are the prospects

Airbnb has published financial results for the second quarter of 2021. During the main trading session, the shares rose by 2.02%, and in the postmarket they fell by 4.48%.

Briefly about the main thing

  • The financial results were higher than Wall Street's expectations
  • Shares are falling amid the company's statements about the negative impact of the pandemic
  • The long-term potential of stocks can be revealed with a decrease in the impact of the pandemic

Key financial indicators

  • Revenue increased almost 4 times YoY, to $1.3 billion, which is higher than Wall Street expectations - $1.26 billion
  • Operating losses decreased significantly and amounted to $51.3 million
  • Adjusted loss per share (EPS) was $0.11, which is also better than analysts' forecasts: - $0.36

More detailed

Airbnb reported an increase in the number of bookings by 197%, which the company itself "nights and entertainment", which amounted to $83.1 million, which is 29% more than in the first quarter of 2021.

The company expects that revenue in the third quarter will be the highest in the entire history of observations.

Meanwhile, the report was overshadowed by forecasts about the impact of the pandemic, which led to a drop in stocks.

"The pandemic continues to affect overall travel behavior, including how often and when guests book and cancel reservations. This means that the number of nights and events booked, as well as the total cost of booking, or GBV, will continue to be more unstable and non-linear," the company said in statements.

As for the fourth quarter, Airbnb stated: "We don't know yet how much people will be willing to travel in the fall compared to the summer."

What to do with shares

After the IPO in December last year, Airbnb shares grew rapidly until mid-February 2021, after which the assortment changed to a downward trend. In mid-May, the decline stopped and the quotes moved to the sideways - $150-130-within which the shares remain to this day.

Taking into account yesterday's decline, the share price is 1.1% lower than the IPO price. At the moment, the shares are testing EMA21, under which there is an important support of $140. Overcoming it from the top down opens the way to $130. The most negative scenario will be a descent under $130, which may increase the pressure of sellers.

In the medium term, a sideways consolidation or a more falling stock looks like the most relevant scenario. Reducing the impact of the pandemic may support the quotes, but until then, the shares are not considered as a purchase. The long-term outlook remains moderately positive, as after the pandemic, the company is able to enter a profit trajectory and significantly improve its financial performance due to its new business model, which distinguishes it from classic hotels. 1

Six out of 34 analysts' recommendations are to buy, 14 are to hold and only 2 are to sell. The target varies in the range of $125-220, the average is $174.

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