Estimates after the best-ever quarter
Airbnb will release the earnings of its fourth quarter of last year after the market closes on Tuesday, February 14th. Since the service sector is still increasing after lifting the Covid restrictions, and we can expect more travel before the new year holiday, investors are optimistic about earnings results. However, after the best-ever quarter, it seems complicated to meet market expectations; that is why they lowered their expectations for this quarter.
Airbnb’s Q3 revenue of $2.9 billion reflected the strength in travel demand. The company called Q3 its “biggest and most profitable quarter ever.” Its Earnings per share (EPS), also at $1.79, surged nearly 47% year-over-year. The consensus EPS estimate also is $0.25, which can be a big jump from $0.08 in the same quarter a year ago. For Q4 2022, revenue estimates are between $1.80 billion and $1.9 billion, reflecting growth of 17% to 23%. However, the company cautioned that the growth will moderate slightly compared to Q3 2022.
In summary, we are optimistic about the earnings results; however, we should be more cautious due to overall weakness in the fourth quarter. Better-than-expected results, as well as solid guidance, could provide more upside. The company’s share price has advanced more than 27% this year, and with a favorable report, we can expect a share price of around $120 as a next stop. Breathing above this level can open the doors for $140 to be reached by year-end. On the flip side, a negative report can test $110 and then $100 before the next wave of price growth.