What happened
Shares of Airbnb (ABNB -1.65%) were among the winners in the first half of the year as the home-sharing leader benefited from strong quarterly results, a continued recovery in the travel industry, and a bullish first half for tech stocks.
According to data from S&P Global Market Intelligence, the stock gained 50% through June this year.
As you can see from the chart below, the stock raced out to quick gains to start the year before cooling off and trading mostly sideways for the remainder of the first six months.
So what
Like other tech stocks, Airbnb entered the year after a substantial sell-off in 2022, and the stock was trading near all-time lows, making it effectively undervalued, especially since, unlike most tech stocks, it was negatively impacted by the pandemic.
The stock climbed through January as tech stocks rallied generally, and signs pointed to a strong recovery in the travel industry. The company then confirmed those hopes with a strong fourth-quarter earnings report, beating estimates on the top and bottom lines.
Gross booking value, a forward-looking metric, was up 20% to $13.5 billion, and revenue rose 24%, or 31% in constant currency, to $1.9 billion. Airbnb also pleased investors on the bottom line as earnings per share (EPS) jumped from $0.08 to $0.48, well ahead of estimates at $0.25, showing off the strength of its marketplace business model, which allows it to leverage incremental bookings. The stock jumped on the report as a chorus of analysts raised their price targets on the stock.
In early April, shares dipped due in part to a short report from The Bear Cave, which said professional hosts are now competing with Airbnb, though other sources contradicted the report, and the stock recovered those losses later in the month.
Finally, the stock dove following its Q1 earnings in May. Though the overall numbers were strong, investors had concerns about its guidance. Revenue rose 20% to $1.81 billion, slightly better than estimates, and gross-booking value was up 19% to $20.4 billion.
On the bottom line, EPS improved from a loss of $0.03 in the quarter a year ago to $0.18, ahead of the consensus at $0.09.
However, Q2 revenue guidance called for 12% to 16% growth to $2.35 billion to $2.45 billion as comparisons get more difficult, and that was a bit lighter than analyst estimates. It also forecast flat adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
The stock fell 11% on the news but rebounded in June as it sued to block a new regulation in New York City.
Now what
Airbnb's business continues to look strong, but its valuation is not as compelling as it was at the beginning of the year.
Still, the company is benefiting from higher interest rates as it earns interest on the money it holds between bookings and stays, and it continues to dominate the home-sharing market. Over the long term, the stock looks like a winner even if growth is set to moderate this year.
