Why These Travel Stocks Are Jumping Right Now

Investors dealt with some turbulence on Wall Street during Tuesday's regular trading session, with the Dow Jones Industrial Average (^DJI 1.05%) finishing lower but the Nasdaq Composite (^IXIC 1.20%) gaining ground. More broadly, market participants seemed uncertain about whether a slightly higher inflation reading than expected would have an adverse impact on market sentiment. The S&P 500 (^GSPC 1.03%) finished close to unchanged on the day.

Data source: Yahoo! Finance.

Helping to lift the mood after the closing bell, both Airbnb (ABNB 2.51%) and Tripadvisor (TRIP -0.14%) moved higher after announcing their latest financial results. Investors have hoped that travel stocks would get a nice boost as travelers return to their normal behavior as the impact of the COVID-19 pandemic wanes. From what Airbnb and Tripadvisor said, it appears those hopes are still on track to become reality. Read on to learn more about what both companies just said.

Airbnb gains altitude

Shares of Airbnb were up 9% in after-hours trading on Tuesday afternoon. The lodging and experience provider's fourth-quarter financial report built up some enthusiasm among its shareholder base.

Airbnb's quarterly results were a strong finish to a great year. Revenue for the quarter was up 24% year over year to $1.90 billion, while net income soared almost sixfold to $319 million. Gross booking value of $13.5 billion was 20% higher than in the year-ago period, and the total number of nights and experiences booked came in at 88.2 million, up 20% from the same period in 2021. For the full 2022 year, revenue of $8.40 billion was up 40% from 2021, and the company reversed a 2021 loss with net income of $1.9 billion.

A number of positive trends helped Airbnb. Borders opened, enabling more international travel, and people returned to listings in urban locations. Long-term stay growth continued to outpace overall business gains, and Airbnb brought in more than 900,000 new active listings over the past 12 months, finishing 2022 with 6.6 million properties on its network.

Investors had anticipated that Airbnb would do well, so it was nice to get confirmation. Having reached profitability, Airbnb could see its stock get more attention from discerning investors looking for disruptive companies that are actually making money in the current environment.

A good review for Tripadvisor

Elsewhere, shares of Tripadvisor also rose 9%. The travel-guidance company saw similar improvements in sales and earnings due to rising travel activity levels.

Tripadvisor's total revenue jumped 47% in Q4 2022 compared to 2021 levels. That helped the company generate an adjusted profit of $24 million, working out to $0.16 per share. Tripadvisor's core business segment saw quarterly sales climb 34% year over year. For 2022 as a whole, Tripadvisor posted sales of $1.49 billion and adjusted net income of $109 million, or $0.75 per share.

For 2023, Tripadvisor sees a number of opportunities for growth. The company wants to focus on experiences to supplement its hotel offerings, while also broadening the number of partners it works with on the media front. Tripadvisor's guidance was vague, projecting revenue growth that "reflects the diverse growth profiles across our portfolio and is consistent with broader travel growth trends," but investors seemed to take that characterization as a positive sign.

Tripadvisor still faces plenty of competition in travel, but shareholders hope that its international exposure will be a long-term benefit. At least for today, there's plenty of room for a rising tide to lift travel stocks across the industry.