Airbnb warns Delta variant could disrupt travel

Airbnb had a blockbuster in the second quarter, with revenue up nearly 300% and beating expectations. But he also signaled bad news: The company is worried about the impact of the Delta variant on consumers’ future travel plans.

The company has benefited from more people taking vacations in the spring and summer, but Airbnb says the next few months could be extremely bumpy. Airbnb shares fell nearly 2% late Friday morning on the company’s warning.

“In the short term,” Airbnb said in its results letter to shareholders, COVID and new variants, including Delta, “will continue to affect overall travel behavior, including how often and when customers book and cancel. “. As a result, future Airbnb bookings “will continue to be more volatile and non-linear.”

Airbnb, however, tried to reassure investors by telling them that the impact would be temporary. And the company also said in its letter to shareholders that it expects third quarter revenue to be the highest on record.

Analysts currently forecast Airbnb to post revenue of nearly $ 1.9 billion in the third quarter, up from $ 1.3 billion in the second quarter.

Industry-wide challenges

Many other travel and leisure companies face similar challenges. Shares of Disney, which also reported strong earnings on Thursday, hotel chains Marriott and Hyatt, and major airline Delta have also fallen behind the broader market this year.

As for Airbnb, Wall Street had a mixed reaction to the financial results and forecasts released Thursday night.

Wells Fargo analyst Brian Fitzgerald raised his target price on the stock to $ 210, more than 40% above Airbnb’s current price.

Fitzgerald praised the company for adding inventory in high demand markets, noting that as more companies delay the return of workers to their offices, Airbnb should benefit from more people seeking to book long-term stays, especially in non-urban markets.

“We continue to expect the post-COVID travel landscape to be characterized by greater work flexibility and longer stays,” he wrote in a report, adding that Airbnb “remains the best. positioned to respond to new trends in demand “.

But Mizuho Americas analyst James Lee is more concerned, noting in a report that growth levels compared to the pre-pandemic period of 2019 could be lower than Wall Street forecasts “due to uncertainties over the future. ‘increase in COVID cases’.

Lee has a “neutral” rating on the stock, adding that Airbnb stocks are “still trading at a significant premium to their peers” in the travel industry.

Airbnb has had an eventful run on Wall Street, since the company went public late last year in one of the most anticipated debuts of a so-called unicorn startup in some time. Stocks more than doubled on their first day of trading in December 2020, but are flat in 2021, behind double-digit percentage gains in the broader market.

Airbnb stock is also trading more than 30% below the all-time high it reached in February. But it’s still worth over $ 90 billion, nearly three times Hilton’s market value.

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