Airbnb (ABNB -1.39%) is scheduled to report fiscal 2021 fourth-quarter earnings on Feb. 15. The international travel facilitator is regaining momentum as folks get vaccinated, and consumer mobility is increasing.
Still, the COVID-19 disease is unpredictable and evolving. The rise of the omicron variant created a surge of infections in certain parts of the world, threatening to slow Airbnb's momentum. When it reports Q4 earnings, investors will want to look at gross booking value to see if the omicron variant of COVID-19 had a meaningful effect.
Booking growth despite omicron can unlock Airbnb's stock from pandemic fears
Recall that Airbnb does not own or operate any physical properties folks can reserve on its website. Instead, it merely brings together hosts and travelers and takes a percentage of transactions. That said, many people plan travel months ahead and try to reserve their preferred place early.
Airbnb defines gross booking value as the dollar value of bookings on the platform in a period and includes host earnings, service fees, cleaning fees and taxes, net of cancellations, and alterations that occurred during that period. The metric is insightful to observe customer demand for its services for the next few quarters.
Airbnb reported a gross booking value of $11.9 billion in its third quarter ended Sept. 30, up by 48% from the same quarter in 2020. More impressively, it was up by 23% from the same quarter in 2019, demonstrating a healthy recovery from pandemic-related slowdowns in 2020.
It will be understandable if Airbnb reports a modest deceleration of the growth rate in gross bookings. After all, there was a surge of infection caused by the omicron variant. Even if that did not reduce consumer enthusiasm for travel, it would dampen their ability to do so because of travel restrictions that require negative COVID-19 tests.
However, if there is a significant pullback in bookings on Airbnb, it could indicate a continued vulnerability whereby customer demand will contract with every new wave of COVID-19.
What this could mean for Airbnb investors
Analysts on Wall Street expect Airbnb to report revenue of $1.46 billion and earnings per share (EPS) of $0.03. If it meets that revenue projection, it would be an increase of 69.80% from the same period the year before. And the EPS estimate would be a dramatic turnaround from last year, when it lost $10.84 per share.
The stock is down 5% year to date in 2022. It looks like before Airbnb stock can lift off, it needs to get past the risks related to COVID-19. One way it can prove to the market that the virus is no longer a meaningful threat to operating performance is to deliver robust booking growth despite the omicron variant.