Insights

Why Airbnb Stock Is Tumbling Today

What happened 

You wouldn’t know it by looking at Airbnb‘s (NASDAQ: ABNB) share price today, but the travel booking platform reported strong second-quarter results late yesterday. The company’s earnings per share (EPS) in the quarter easily outpaced Wall Street’s consensus estimate, but investors might have focused their attention on the fact that revenue fell below analysts’ average estimate. 

As a result, the travel stock was down by 5.6% as of 10:41 a.m. ET today. 

So what 

The company’s earnings were solid in the second quarter, with adjusted EPS of $0.56 beating analysts’ consensus estimate of $0.44. Adding to the good news was the fact that the company’s net income rose to $379 million, up from a loss of $68 million in the year-ago quarter, making the second quarter the most profitable in Airbnb’s history.  

Image source: Getty Images.

The company also reported impressive bookings growth, with the total number of nights and experiences booked increasing 25% year over year to 103.7 million. This helped the company’s gross booking value spike 27% from the year-ago quarter to $17 billion. 

But despite all of that good news, some investors appeared disappointed that the company’s revenue of $2.10 billion (an increase of 58% year over year) fell slightly below Wall Street’s consensus estimate of $2.11 billion for the quarter. 

Investors may have also focused their attention on the company’s free cash flow, which declined sequentially from $1.2 billion to $795 million.  

Now what 

Management issued third-quarter revenue guidance in the range of $2.78 billion to $2.88 billion. That would represent about a 27% year-over-year increase at the midpoint of guidance and is above analysts’ average estimate of $2.77 billion. 

Investors’ negative reaction to Airbnb’s latest financial results could be yet another reminder that they remain nervous about high-growth companies right now and are concerned about how a potential economic slowdown could affect the company’s business.

Chris Neiger has positions in Airbnb, Inc. The Motley Fool has positions in and recommends Airbnb, Inc. The Motley Fool has a disclosure policy.

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