Strong Recovery in Under-penetrated Markets
In a letter to shareholders, Airbnb stated their commitment to building greater momentum in under-penetrated markets as international travel continues to recover. In the Asia Pacific region, the business has fully rebounded to pre-pandemic levels, with gross nights growing by 23% in Q3 2023 compared to Q3 2019. China’s outbound travel alone increased over 100% in the same period. Smaller Asia Pacific markets, including Taiwan, the Philippines, Thailand, Hong Kong, and Indonesia, witnessed year-over-year growth above 30% in terms of gross nights booked on an origin basis.
Market Reaction and Historical Volatility
Airbnb’s shares have demonstrated high volatility over the past year, with 16 moves greater than 5%. The market’s response to the fee increase indicates that it considers the news meaningful, though not substantial enough to fundamentally alter its perception of the business. One notable decline occurred 9 months ago when the stock dropped 10.6% after the company reported first-quarter results that exceeded analysts’ estimates for gross bookings, revenue, earnings per share (EPS), and free cash flow. However, guidance for room nights, revenue, and adjusted EBITDA for the next quarter fell short of consensus expectations, mainly due to changes in the expected timing of marketing spend. Additionally, the projected EBITDA margin for 2023 was slightly below expectations, suggesting limited operating leverage on expenses for the year. Given these factors, the overall outlook for the company appears negative.
Despite the challenges, Airbnb’s shares have performed well, rising 11.7% since the beginning of the year. Trading at $150.09 per share, the stock is currently close to its 52-week high of $153.33 achieved in July 2023.