What Happened?
Shares of online accommodations platform Airbnb (NASDAQ: ABNB) jumped 3.9% in the morning session after the company reported strong fourth-quarter revenue and provided an optimistic outlook for the upcoming quarter.
The company's fourth-quarter revenue reached $2.78 billion, a 12% year-over-year increase that beat analyst expectations. Driving this were healthy gross bookings and nights and experiences booked, both of which exceeded expectations as well.
Lastly, EBITDA came in above Wall Street Consensus. Management attributed the momentum to a series of targeted product improvements, including the launch of Reserve Now, Pay Later, updates to cancellation policies, and a move towards more transparent pricing.
Looking ahead, Airbnb guided for first-quarter revenue of $2.61 billion at the midpoint, higher than analysts had predicted. In Q1, Airbnb expects EBITDA margin to remain roughly stable from the same period last year, in line with expectations, as the company invests efficiency gains to support key growth initiatives such as tech (AI) and marketing. Overall this was a strong quarter.
After the initial pop the shares cooled down to $120.77, up 3.3% from previous close.
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What Is The Market Telling Us
Airbnb’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 12 months ago when the stock gained 15.9% on the news that the company reported strong fourth-quarter results: The top line was strong, with gross booking value, nights & experiences booked, and revenue all accelerating in growth from last quarter. Airbnb also blew past analysts' EBITDA expectations this quarter, showing that the growth is profitable as well. While revenue guidance for the next quarter missed, adjusted EBITDA margin guidance for the full year came in ahead. Overall, this quarter had some key positives. Following the results, Baird upgraded the stock's rating from Neutral to Buy, adding "Upgrading Airbnb to Outperform, following a strong finish to 2024, with Q1 likely the low-water mark for growth and margins in 2025, and significant platform expansion planned for later this year." Goldman Sachs also raised its rating from Sell to Neutral, noting, "As framed by management, the forward growth and margin trajectory of new investment initiatives will still need additional time to gain visibility, but we see a much lower probability (absent a change in macroeconomic environment that is less about ABNB fundamentals) of an estimate revision cycle that would cause the shares to underperform in that scenario.".
Airbnb is down 9.2% since the beginning of the year, and at $120.77 per share, it is trading 25.2% below its 52-week high of $161.42 from February 2025. Investors who bought $1,000 worth of Airbnb’s shares 5 years ago would now be looking at an investment worth $575.47.
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