Flash Alpha | Airbnb beat the estimates and its strong fundamentals
Airbnb (ABNB)
Airbnb fell about 6.6% at the pre-market trading even after the company reported better-than-expected quarterly earnings and revenue. On Airbnb’s earnings call, management said its recovery trends vary by region, with global cancellation rates in the third quarter above 2019 levels but below 2021 and 2020 levels.
However, there are still several reasons to own Airbnb’s stock despite its latest quarterly numbers, according to Evercore ISI’s Mark Mahoney. He reiterated the stock as an outperform with a price target of $150, which implies a 37.7% upside.
Mahaney said the travel platform’s performance was “more of an Expectations Correction than a Fundamentals Correction.” Mahaney also said metrics for booked nights were not as depressed as they were in the previous quarter, while revenue and gross bookings were also performing fairly well. He also implied that 15% supply growth disclosures contrast with the arguments that supply has peaked, which would help growth going forward.
From a fundamental perspective, Airbnb’s financial health has improved in the past few years. It would further help Airbnb to grow in the future. Given the hope that China might loosen the strict zero-covid policy, Airbnb may benefit from Chinese traveling around the world.