Airbnb
Inside the Numbers
In Q4, Airbnb reported a loss of $3.9 billion which translates to a loss of $11.24 per share. This was a steep fall from last year's Q4 loss of $352 million with most of the loss attributed to accounting changes following the IPO.
Revenue came in at $859 million which handily topped expectations of $748 million. This was a 22% decline from last year's $1.1 billion and a 36% decline from Q3's $1.3 billion.
In Q4, there were a total of 46.3 million "nights and experiences" bookings on the platform which was a 39% decline from 2019's Q4 with 61.8 million total bookings. Gross booking value was $5.9 billion, down 31% year over year. Gross booking value was also down more than 26% from $8 billion in the third quarter.
The company has clearly suffered a toll from the coronavirus pandemic. Q4 was materially worse as rising case counts forced many to even curtail shorter trips that they were taking. The platform did do much better than many other travel stocks which saw declines in the 40 to 60% range as many chose to take shorter road trips and took advantage of locations where they could work remotely.
The company didn't issue guidance due to "limited visibility" given variables like the vaccine rollout and people's willingness to travel. It did say that it expects Q1's revenue decline to be less than that of Q4. It also expects Q1 gross booking to be above 2020's Q1 but below 2019's Q1.
Given that Airbnb is a new company, there's little to anchor expectations so more focus is placed on management's comments. Interestingly, CEO Brian Chesky said the company learned that from the pandemic that it could cut marketing to zero and that 95% of traffic would remain.
Stock Price Outlook
Airbnb's stock is a Rorschach test for investors. It's easy to come up with a bullish scenario. As the economy reopens, there is going to be massive pent-up demand for people to take vacations and visit friends and family. Understandably, they will be hesitant and take short trips at first which is ideal for Airbnb. Airbnb is also very popular among Millennials and Generation Z.Additionally, the company has all the benefits of a capital-light, high-margin, platform business with little competition.
The bear case centers around valuation. The stock has a market cap of $122 billion. Yet, it only had $3 billion in revenue and is years away from profitability. If interest rates continue moving higher, it will be a headwind for all sorts of high-multiple stocks including Airbnb.
While the bearish argument is compelling, the stock's bullish reaction to a big earnings miss is more meaningful in the near-term. Investors have priced in the bad news and are looking forward. Given the plunge in coronavirus cases and the steady drumbeat of vaccinations, it's likely that the company will return to a growth track by the end of the year.
