HAS Airbnb (ABNB -1.04%) become more than just a digital travel agency? In this video clip from “The Virtual Opportunities Show” on Motley Fool live, recorded on May 3Fool.com contributors Rachel Warren and Travis Hoium share their thoughts on why Airbnb should be considered a tech-friendly and highly attractive investment platform.
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Rachel Warren: As you mentioned earlier, Airbnb is about to report its results for the first quarter of 2022. I think there are a lot of investors, myself included, who are watching this stock very closely. The company previously said it expected to report revenue between $1.41 billion and $1.48 billion. Analysts estimate somewhere in the middle of that revenue growth of around 64% year over year. At this time, analysts expect the company to report a loss per share of around $0.28. Just a few key numbers to keep in mind as we head into the earnings report here very soon.
I will say looking at the company’s report for the full year and the fourth quarter of 2021, there’s been such a strong recovery, not just from 2020, where travel obviously slowed down to a sudden stop. But another thing I liked about Airbnb is that they provided two-year comparisons, to give investors a clearer view of what that growth really looks like.
For example, in the fourth quarter of 2021, when nights and experiences booked were up 60% year over year compared to the same quarter in 2020, this segment, nights and experiences booked were not were down only 3% from the fourth quarter of 2019. Really robust recovery there. The gross value of bookings actually increased by 32% compared to the fourth quarter of 2019. Revenue increased by approximately 40% compared to the fourth quarter of 2019.
The company actually reported positive net profit in the last quarter of 2021. This was a record net profit. This is something where I have been very happy to see Airbnb continually move towards sustained profitability. It’s something I will definitely watch. What does this bottom line look like here in this last quarter? What kind of guidance do they give for the coming quarters?
I think the recovery has been very strong. I mean obviously a company like Airbnb was going to be hit extremely hard when the pandemic hit, and to see how quickly those measures have recovered, over the course of 2021, I think that’s very encouraging.
To answer Joe’s question, how should an investor view Airbnb, is it a technology platform or is it a travel agency? I think it’s basically a technology platform that caters to the public as a travel agency. Maybe that’s my opinion because I think the way it’s built looks a lot like a technology platform, that’s something the management even said.
I think it has unique competitive advantages over some of these companies, like what? Reserve credits (BKNG 0.03%)for example, because I think the way Airbnb is used is different than some of these big companies, like hotel companies Marriott (MAR 0.36%). In most cases, you don’t necessarily have people booking a Marriott to live and work there for a long time.
While this cohort of people who live and work or simply book stays of 28 days or more on Airbnb increasingly represents the overall growth of their platform. I think there’s a very specific need that Airbnb addresses while attracting regular vacationers, people who stay for shorter periods. I think that gives it an edge over your traditional travel stock.
Travis Houm: This also relates to their pricing structure and fees. I know Bill Mann had a tweet that went viral over the weekend that talked about how the fees, if you stay one night at an Airbnb, can be really extortionate. It’s a bit intentional I think. I mean, they don’t necessarily want them and their hosts would much rather someone stay a week or a month, than stay a night, have to flip the place, another person stays a night.
I think they are much clearer that the clientele is very different. But I agree that it’s a technology platform, especially if you look at it in the case where you have the customers on one side, you have the suppliers on the other, and they’re the choke point in the middle. This is where I’m not going to run into a random client or host on the internet. I have to go through Airbnb, so that’s the definition of a platform.
Travis Hoium has positions in Airbnb, Inc. The Motley Fool has positions in and recommends Airbnb, Inc. and Booking Holdings. The Motley Fool recommends Marriott International and recommends the following options: Long January 2023 $115 calls on Marriott International. The Motley Fool has a disclosure policy.
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