Airbnb reported record third-quarter profit of $1.21 billion as bookings and average daily rates increased, and the company said today demand for short-term rentals remained strong despite the economic uncertainty.
However, earnings and bookings were below Wall Street expectations. The company said booking growth would slow in the fourth quarter, while average daily rates would also come under pressure.
Airbnb shares fell 7% after about two hours of extended trading.
Airbnb shares have fallen nearly 35% this year despite the travel recovery, a highly profitable first half, and relentless upbeat comments from CEO Brian Chesky and other business leaders.
Most of the share price decline has occurred since early May. Investors fear that rising prices for basic commodities, including housing, food and gasoline – as well as fear of recession – will push consumers to cut back on discretionary spending like travel.
Airbnb faces other more fundamental threats, perhaps none greater than the perception among many guests that bookings on the site are no longer a good deal due to high cleaning fees and misleading listings.
Chesky tweeted last month that changing the way Airbnb displays prices is “one of my top priorities.” He said today that pricing was based on displaying the nightly rate first – fees collected by the host and company are added as guests go through the booking process and can significantly increase the final bill.
“One of the things we’ve heard from guests — and we’ve heard it loud and clear — is that people would like a little more transparency about what they’re actually paying for,” Chesky said during the interview. a call with analysts. He promised more details soon.
Another sore point for tenants: some have posted photos of detailed lists of tasks that hosts require them to perform. Dissatisfaction goes both ways – hosts are increasingly complaining about problematic tenants.
Airbnb has been in a long-running battle to crack down on unauthorized parties, some of which have ended in shootings. The company also faces more efforts from local residents and governments to regulate the short-term rental market.
Many major cities in the United States and abroad have added costly permit requirements to operate a short-term rental, and they are fining landlords who don’t follow the rules. The trend is spreading to small towns. Officials in the Dallas suburb of Plano are considering tougher rules after a case of prostitution at an Airbnb in a residential neighborhood.
Third-quarter profit, compared with $834 million in the same quarter last year, was $1.22 per share. Analysts were expecting $1.47 per share, according to a FactSet survey.
Revenue jumped 29% from a year earlier to $2.88 billion, slightly above analysts’ forecast of $2.85 billion.
The number of nights and experiences booked increased by 25% compared to the third quarter of last year, and the value of bookings jumped by 31%.
Airbnb forecast fourth-quarter revenue to be between $1.80 billion and $1.88 billion. The midpoint of that range would be below Wall Street’s forecast of $1.87 billion.
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