Airbnb (NASDAQ:ABNB) released better-than-expected second-quarter financial numbers. Despite a solid Q2 beat, its stock is trading in the red. While the pent-up travel demand supports its revenue and earnings growth, investors should take caution as the stock has appreciated significantly (up about 65% year-to-date), limiting the upside potential.
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But before we delve deeper, let’s revisit its second-quarter performance.
Q2 Earnings Snapshot
Thanks to the sustained demand, Airbnb delivered revenues of $2.48 billion, up 18% year-over-year. The reported revenues also exceeded analysts’ consensus estimate of $2.42 billion. The improvement in Nights and Experiences Booked and the increase in average daily rates despite tough year-over-year comparisons drove ABNB’s top line.
Moreover, Airbnb delivered earnings of $0.98 a share, up 75% year-over-year, driven by higher revenues and improvements in the overall cost structure. Moreover, its EPS came well ahead of the Street’s expectations of $0.80 per share.
ABNB’s Business Is Expected to Sustain its Momentum
Airbnb expects the momentum in its business to be sustained in the third quarter, reflecting sequential and year-over-year growth in Nights and Experiences. Further, the average daily rates are expected to increase as the benefits from the mix shift are likely to more than offset the negatives stemming from the new host pricing tools.
Furthermore, on August 4, Eric Sheridan of Goldman Sachs reiterated a Sell rating on ABNB stock following its Q2 earnings. The analyst increased the price target on Airbnb stock to $117 from $97. Conversely, he listed multiple negatives, including the high stock-based compensation expenses, lower-than-expected Nights & Experienced Booked in Q2, and pressure on average daily rates.
Is Airbnb Stock a Buy or Hold?
Analysts are cautiously optimistic about ABNB stock. It has a Moderate Buy consensus rating on TipRanks based on 12 Buy, 15 Hold, and three Sell recommendations. Analysts’ average price target of $134.36 implies a downside potential of 4.63% from current levels.
