Airbnb stock drops sharply despite beaten earnings, plans to buy back $2 billion worth of shares
Airbnb Inc. said on Tuesday it had enjoyed its first profitable second quarter as a public company and was so confident in its business that it was repurchasing $2 billion of its stock.
“Our second quarter results demonstrate that Airbnb has achieved large-scale growth and profitability,” Chief Executive Brian Chesky said in prepared remarks on the company’s earnings call.
shares fell as much as 9.5% after hours, after rising nearly 5% in the regular session to close at $116.34. They have increased by 14% in the last five days.
The accommodation booking company reported net income of $379 million, or 56 cents per share, in the second quarter, compared with a loss of $68 million, or 11 cents per share, a year ago. Revenue reached $2.19 billion from $1.34 billion in the prior year quarter.
Analysts polled by FactSet had forecast earnings of 45 cents a share on revenue of $2.1 billion.
Airbnb said travel demand was strong almost everywhere. The company’s gross bookings were $17 billion, up 27% year-over-year and 73% from the pre-pandemic quarter of 2019. Customers booked 103.7 million nights and experiences, the highest on record and up 24% from the 2019 quarter. Gross nights booked for cross-border travel continued to beat pre-pandemic levels and doubled from the 2019 quarter. the previous year, the company said.
Those numbers, however, fell short of analysts’ expectations of 106.2 million nights and experiences booked and $17.13 billion in gross bookings.
The company also said its free cash flow for the second quarter was $795 million, its highest level for a second quarter. This brings its total cash on hand to nearly $10 billion. During the conference call, Chief Financial Officer Dave Stephenson said the company does not need as much cash, which is why it is buying back shares. He and Chesky both said they remain committed to growing the business and will continue to invest in growing the workforce by high single digits this year.
Airbnb expects third-quarter revenue of $2.78 billion to $2.88 billion, which is expected to be the highest yet. It also expects Adjusted Ebitda to be the highest yet, although it did not provide a figure. Analysts on average had expected earnings of $1.29 per share on revenue of $2.77 billion and adjusted Ebitda of $1.26 billion, according to FactSet.
Responding to analysts on the call who wanted to know the possible macroeconomic effects on the business, Stephenson said, “We don’t know what the economy will bring, but we know Airbnb is resilient.” He noted that the company has different types of real estate listings; that he had “already made difficult choices” in laying off employees at the start of the coronavirus pandemic; and that it’s “a leaner, tighter machine”.
The company said the Asia-Pacific region “remains depressed” compared to the same period before the pandemic, and Stephenson expressed optimism for the upside once it catches up with the recovery in other regions.
YipitData, which tracks Airbnb’s active listings, said it saw year-over-year growth in June in all regions except China – where the company pulled all of its listings due to difficulty doing business there, she said in May. June registrations in North America were up 19% year over year. Two regions, Latin America and the Middle East and Africa, each saw 14% growth in registrations in June, according to YipitData.
Airbnb shares have fallen about 30% so far this year. For comparison, the S&P 500 SPX index,
has declined by 13% since the beginning of the year.