Airbnb share price on watch ahead of Q1 earnings

With a gradual increase in air travel on the back of ongoing vaccination, can Airbnb’s Q1 results deliver this week?

When does Airbnb report earnings?

Airbnb Inc is set to release its Q1 financial results on 13 May, after the market closes.

What to expect

Airbnb’s earnings have previously been hit by travel border restrictions from Covid-19 but have since been set on a path of recovery. Looking at some of its key performance indicators, one may find that its gross booking value has declined 31% YoY during the previous quarter due to Covid-19 resurgences and lockdowns. That said, with ongoing vaccinations and improving outlook for summer travel this year, a rebound in gross booking value may be expected ahead.

One may also note that the overall net nights and experiences booked have remained largely stable across 2H 2020 despite Covid-19 resurgences. This resilience may be supported by an increase in domestic travel, which partially offset the fall in cross-border travel.

With the strong domestic travel demand, the average daily rate also remains well-supported, trending even higher than pre-Covid-19 levels. This may bode well for Airbnb, which mainly charges a service-fees percentage for accommodation bookings.

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With close to 80% of its revenue derived from North America and EMEA, a relatively-controlled Covid-19 situation in these regions may continue to provide tailwind from domestic travel. From the Transportation Security Administration checkpoint numbers, one can see an ongoing increase in people travelling, as ongoing vaccinations and economic reopening continues. Pent-up demand for travel towards 2H 2021 may also be a strong growth catalyst for Airbnb.

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Refinitiv estimate for its earnings per share (EPS) suggests smaller losses for its upcoming results, with loss of US$1.17 per share compared to loss of US$10.84 in its previous quarter. Revenue for its upcoming quarter may remain weak, as lockdowns in some countries remain during the measured period. However, with lockdown easing towards Q2 2021 and beyond, one may expect a stronger recovery in revenue ahead based on estimates.

How to trade Airbnb earnings

Airbnb’s current forward price-to-sales ratio stands at 17.32, commanding a significant premium over its competitors in both the online travel group and the lodging industry. Investors may have attributed some premium towards its strong brand name and asset-light business model, where it does not bear ownership of any of the rental properties advertised on its platform. That said, one to watch for its upcoming earnings results as justification for its relatively high valuation compared to its competitors.

Company

Market Cap (US$)

Blended Forward Price/Sales

Airbnb 93.4 billion 17.32

Online Travel Peer Group

Booking Holdings 95.5 billion 8.57
Expedia Group 25.5 billion 2.80
Trip.com 24.8 billion 5.47
Trip Advisor 6.1 billion 5.94

Lodging Industry Leaders

Marriott International 47.8 billion 3.20
Hilton Worldwide 34.4 billion 4.99
Intercontinental Hotels 13.2 billion 6.04
Hyatt Hotels 8.2 billion 2.33
Wyndham Hotels 7.0 billion 4.11

Source: Bloomberg. Data updated as of 9 May 2021.

Currently, the stock has 14 ‘buy’ recommendations, 19 ‘holds’ and three ‘sells’. The Bloomberg 12-month consensus target price of US$186.26 suggests a potential 23.2% upside from current price.

Airbnb shares – technical analysis

From its technicals, Airbnb’s share price has been under pressure lately, in line with the global surge in Covid-19 cases. It has recently broken down of its descending wedge pattern, signalling near-term weakness in its share price. Should prices retrace further, one may look out for a potential rebound at the 143.50 region, where prices remain supported on previous two occasions in coincidence with the Fibonacci 76.4% retracement level.

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