Airbnb (ABNB) is set to release second-quarter 2021 earnings on August 12.
This year, shares of the online marketplace for holiday rentals have gained less than 1%, and are now trading at around $148.
With the rollout of vaccines and the relaxation of some travel restrictions, this stock is worth considering ahead of the results. Solid Q2 results might propel the stock price upward, so let’s take a closer look at what analysts on the Street are expecting.
Q2 Expectations
For Q2, the Street expects Airbnb to report a loss per share of $0.48 and revenues of $1.23 billion.
Meanwhile, the Earnings Whisper number, or the Street’s unofficial view on earnings, stands at a loss of $0.40 per share. (See Airbnb Dividend Date and History on TipRanks)
Airbnb’s Prior Quarter Snapshot
Airbnb reported mixed results in Q1, with revenues increasing as travel made a comeback, while the losses widened.
The company posted revenues of $887 million, up 5% year-on-year, beating consensus estimates of $717.8 million. The increase was driven by higher average daily rates (ADR) and growth in North American operations.
Meanwhile, losses widened to $1.2 billion or a loss of $1.95 per share. Analysts were expecting a loss of $1.05 per share.
What to Watch for in Airbnb’s Earnings
Last year, the travel industry took a hit, and Airbnb, like other travel-related businesses, suffered significant losses.
Yet, now that travel has increased as a result of the vaccination rollout, this property rental company is making every attempt to impress its investors.
On May 24, Airbnb announced the launch of over 100 product upgrades in order to capitalize on the expected recovery in the travel industry. The enhancements are expected to improve its search skills, allowing for a better match between guests and hosts in the future. Also, Airbnb increased the number of support agents and expanded its language range from 11 to 42 languages.
As people look to schedule trips on a more flexible basis, these enhancements should let Airbnb ride the tailwinds of the receding pandemic.
To get a clearer picture of the company’s future performance, the investors can take note of a few vital metrics.
Key business metrics: In Q1, bookings for nights and experiences were up 13% year-over-year, and gross booking value (GBV) was up 52% year-over-year. Meanwhile, the unearned fees totaled $946 million at the end of Q1, up 43.8% year-over-year.
To simplify the terms, GBV represents the dollar value of bookings on the company’s platform, while unearned fees here refer to the amount received by Airbnb for travel reservations made by persons who have not yet used those services.
Investors will be waiting to see how these metrics perform, in order to get better insight into people’s willingness to travel.
In his last conference call, Airbnb’s CEO Brian Chesky expressed his trust in the company, eliciting cheering from shareholders.
Chesky stated, “We are proud of our strong results. We expect a travel rebound unlike anything we have seen before. Travel is coming back and Airbnb is ready.”
For Q2, the company expects revenue to be much higher than the year-ago quarter. However, ABNB believes that the company currently has “limited visibility for growth trends in the second half of 2021.”
Indeed, predicting Airbnb’s performance in Q3 and beyond is extremely challenging, particularly with the delta variant strain spreading around the world, creating a new wave of infections.
Analyst’s Recommendation
Ahead of the Q2 earnings release, Justin Patterson of KeyBanc upgraded the rating to Buy from Neutral and set a price target of $180.00. This implies 21.7% upside potential to current levels.
Patterson remains optimistic about Airbnb’s upcoming results and expects the company to report well above current Street estimates. For Q2, the analyst expects revenue of $1.34 billion, better than the consensus estimate of $1.25 billion.
He also stated that Airbnb’s decision to spend almost zero on advertising makes the company “more insulated from digital ad inflation.” That, in turn, gives the company enough “room for margin expansion when revenue accelerates.”
The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 14 Buys and 12 Holds. The average ABNB price target of $173.46 implies 17.2% upside potential from the current levels.
Airbnb scores an 6 of 10 from TipRanks’ Smart Score rating system, indicating that the stock is in line with market performance.
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
