Airbnb Loses 9.9% In Stock Price Value After Sharing Earnings Guidance For Q4 2022

ByEdward Thompson

Nov 5, 2022

The share prices for Airbnb have experienced a great dip after the officials posted the guidance for the fourth quarter. Even the strong earnings data posted for the third quarter was not able to provide a cushion from the anger of the unhappy investors as they learned about the Q4 guidance.

Airbnb’s Third Quarter Earnings

As per the Airbnb executives, the earnings they generated in the third quarter were quite remarkable. Their earnings for the third quarter were much higher than the estimations made by the analysts.

The company even went on to beat the estimations made by the analysts on Wall Street. The company announced that they successfully overachieved the top and bottom lines and were glad about the performance they delivered in the third quarter.

According to the executives, they generated revenue worth $2.9 billion in the third quarter while the estimations were $2.8 billion. The executives posted that their year-over-year revenue generation was up by 29%. The company successfully generated $100 million more than the estimations.

The officials reported that it was the Nights and Experiences service they offer that saw tremendous and stable growth in the respective growth. Their average daily rates were also higher and their revenues in return were higher than expectations.

Fourth Quarter Guidance

Although Airbnb’s Q3 earnings were quite well, their guidance for Q4 ended up disappointing the majority of the investors. This caused the investors to pull out of their investments in Airbnb shares, thus the huge drop in the company’s overall share prices.

For the running quarter, Airbnb reported that they expect the revenue to be between $1.80 billion and $1.88 billion. The investors were not happy with the minimum guidance as the Refinitiv analysts had set the guidance to $1.85 billion.

Reason for Low Guidance

According to the executives, they do expect a recovery for cross-border travel. However, the recovery is not fast but the company is making a recovery.

Therefore, the company is not expecting to generate much earnings in the fourth quarter. The officials do not want to commit to something they are confident would not be achievable.

Although it has been more than two years, the entire world is still not completely out of the pandemic. Therefore, cross-border travels are still not back to normal.

This is a huge matter of concern and as a result, their earnings are not recovering to the pre-pandemic times.

More Obstacles Ahead

In addition to the above, the company is also being considerate of the high inflation, interest, and now, the unstable forex rates.

These factors may also impact their business tremendously so the company wants to be very careful with their estimations and predictions.

Following the announcement of low guidance and low business recovery, Airbnb’s share prices plummeted by 9%.

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