Pre-market stocks: Wall Street’s confusion over Airbnb is a sign of the times

What’s happening: The company has had a huge second quarter, with revenue rising nearly 300% as spring and summer bookings have jumped. But stocks remain nearly 30% below the all-time high they reached in February.

Part of the apprehension may come from Airbnb’s rich review. The colocation startup is now worth $ 96 billion, which Bank of America says is 13 times the bank’s estimate for 2022 revenue.

But the company is also in limbo due to uncertainty over the outlook, an issue made worse by the spread of the Delta variant.

Deutsche Bank noted on Monday that cases have now been increasing globally for eight consecutive weeks, according to data from Johns Hopkins University. Australia and China are among the countries that have recently tightened restrictions in an attempt to stem an increase in infections.

Airbnb explicitly raised its concerns in a letter to shareholders that accompanied its latest results.

“In the short term, we predict that the impact of Covid-19 and the introduction and spread of new variants of the virus, including the Delta variant, will continue to affect overall travel behavior, including frequency and when customers book and cancel, “the company said. As a result, he continued, future bookings” will continue to be more volatile and non-linear. “

Another warning: The University of Michigan announced Friday that its influential consumer confidence index plunged 13.5% from July to August, reaching a level of 70.2. This is the most bearish reading of the measure since December 2011.

“There is no doubt that the resurgence of the pandemic due to the Delta variant has encountered a mixture of reason and emotion,” said Richard Curtin, chief economist of the survey.

Take a step back: the travel industry is always doing its best to plan for the future. Hyatt (H) on Sunday announced the takeover of Apple Leisure for $ 2.7 billion.

The move is a bet on the future of luxury travel, which is recovering more quickly. It will double the global footprint of Hyatt’s resorts and expand the company’s presence in Europe by 60%.

Airbnb, meanwhile, still predicts third quarter revenue to be the highest on record. Long-term stays at his properties by remote workers while the Delta variant delays return to the office are poised to help his business.

“The company has noted several positive trends that may continue after Covid, including longer stays and an increasing percentage of non-traditional travel bookings,” Bank of America analysts wrote in a research note.

Still, the advent of highly infectious coronavirus variants makes it difficult to say for sure whether a strong summer season will continue until fall, dampening investor enthusiasm.

China’s economic recovery slows

China’s economic recovery is faltering – and it’s not just the spread of the Delta variant that is putting economists and government officials on high alert, reports my CNN Business colleague Laura He.

The latest: Chinese authorities on Monday released new data on industrial production, investment and retail sales for July, showing signs of weakness in the economy.

Industrial production growth was the slowest in 11 months, increasing 6.4% from a year ago. Auto production has been hit by the global semiconductor shortage.

Retail sales growth in July was the weakest of the whole year, while capital investments also fell short of economists’ expectations.

“The spread of the virus and natural disasters have affected the economy in some areas, and the economic recovery is still unstable and uneven,” National Statistics Bureau spokesman Fu Linghui said at a conference. press in Beijing on Monday.

Remember: Along with the latest coronavirus outbreak, catastrophic flooding swept through central China last month, killing more than 300 people. Widespread damage and disruption also caused direct economic losses totaling nearly $ 21 billion, according to government statistics released this month.

Investor Insight: The data triggered a pullback in global equities on Monday, ending a 10-day streak of straight wins for equities in Europe. The big global banks have already cut their growth forecasts for the third quarter in China and revised their estimates downwards for the whole year.

Chinese company warns H&M

Every evening before going to bed, Anushka Sachan takes out her phone to connect to an application.

“It’s kind of becoming a habit,” the 20-year-old Hong Kong University student told my CNN Business colleague Michelle Toh.

The platform Sachan uses is owned by a Chinese brand called Shein – pronounced “She In” – which quickly drew a global army of teenage fans to TikTok.

The mysterious online shopping climber recently made headlines for overtaking Amazon in app downloads in the United States. He created a cult following for his fast fashion clothes sold all over the world.

Some pundits even say it beats mainstays like Zara and H&M at their own game, crafting items faster and using digital savvy. Users regularly check the app to earn points and save on their purchases.

“They’re slowing down fast fashion,” said Erin Schmidt, senior analyst at Coresight Research, a global retail and tech consulting and research firm. “They have changed their model.”

next

Oatly announces its profits before the US markets open. Roblox follows after the close.

Also today: The New York Fed’s Empire State Manufacturing Inquiry arrives at 8:30 a.m. ET.

Coming tomorrow: Home deposit (HD) and Walmart (WMT) report the results.

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