Airbnb Q1 preview: Where next for Airbnb stock?

When will Airbnb release Q1 2022 earnings?

Airbnb is scheduled to release first quarter earnings after the markets close on Tuesday May 3.

Airbnb Q1 earnings preview

Airbnb has set the bar high ahead of its first quarter earnings, having promised to deliver record bookings that will ‘significantly exceed’ pre-pandemic levels for the first time as it continues to spearhead the transformation within the way people travel and live in a post-pandemic world.

Airbnb is at the forefront of a dramatic shift within the market. With remote working now more common than ever before, more people are choosing to uproot and adopt what Airbnb describes as the life of a ‘digital nomad’ that roams from home-to-home while working from their computer. In fact, CEO Brian Chesky is spending a year living on Airbnb and moving from town-to-town every couple of weeks to embrace this new lifestyle. Meanwhile, demand for city breaks and holidays continues to rebound from the pandemic-induced disruption that has only started to really ease this year.

There will continue to be disruption caused by Covid-19 in the first quarter despite the US, Europe and much of Latin America having eased restrictions this year. The biggest concern is in Asia, where demand is still trailing pre-pandemic levels and suffering from fresh virus outbreaks and lockdowns. It is also important to flag that the rapidly-developing conflict in Ukraine could also weigh on Airbnb’s ability to meet expectations in the period considering it has suspended operations in the country, as well as in Russia and Belarus.

With demand continuing to grow to record levels, one of Airbnb’s biggest challenges is attracting more hosts to ensure its platform has what people are looking for. This is a key priority for 2022. At the last update, Airbnb said it had over 4 million hosts with over 6 million listings that earned a record $34 billion in 2021.

In the meantime, Airbnb is benefiting from rising prices as demand outstrips supply. Average Daily Rates (ADR) have already risen above what we saw in 2019 and this is expected to be up around 4% year-on-year in the first quarter, which is expected to result in Gross Booking Value (GBV) hitting a new record of $15.8 billion. That is on the expectation that it will report Nights & Experiences booked of 97.4 million, up over 50% from the year before and marking a large sequential improvement as fears about the Omicron variant faded. ADR will ease this year as demand shifts back to lower-rate regions but will remain elevated compared to 2019. This should be closely-watched as Airbnb has said earnings are ‘highly sensitive’ to the metric, which could prove crucial in deciding how successful Airbnb can be in 2022.

Wall Street forecasts Airbnb will report revenue of $1.45 billion in the first quarter, in the middle of the company’s guidance range, and post its fourth consecutive quarter of positive adjusted Ebitda of $76.2 million. However, things will remain volatile at the bottom-line with Airbnb forecast to report a $114.7 million net loss after delivering two consecutive quarters of profit. It is worth noting that Airbnb will focus on comparing its quarterly results to 2019 levels rather than what was delivered in 2020 or 2021, when results proved volatile.

Airbnb has been extremely bullish on its prospects for this year and beyond despite numerous headwinds and the tough macro-economic outlook. Covid-19 remains the key threat and could be knocking the board’s confidence and an improvement in Asia could prompt management to upgrade its view. Airbnb has also been working on making itself more efficient and cutting out unnecessary costs, which may help counter any weakness should ADR soften more than anticipated this year.

Airbnb will provide its guidance for the second quarter and how this fares compared to Wall Street’s current forecasts will prove key in deciding how markets will respond to the results. Analysts currently believe Airbnb can deliver $1.96 billion in revenue and $479.9 million in adjusted Ebitda in the second quarter – both of which would mark a new quarterly record for the business.

Where next for ABNB stock?

Airbnb shares have been trending lower since November, having formed a series of lower-highs. This trend remains firmly in play but how low the current downturn goes could prove vital in deciding where shares could head next.

If the downtrend persists then we could see the stock slide below the $131 level of support hit in both March 2022 and July 2021 in order to hit a lower-low. The bearish RSI suggest we could see shares come under further pressure in the short-term, although trading volumes have recently waned to suggest the downtrend could be running out of steam.

The $131 floor needs to hold in order to signal that the downtrend can be broken, although this would need to be reinforced by a significant move upwards in order to set a higher-high and to avoid creating a wedge. This would require it to recapture the 50-day moving average at $161 and then the 100-day at $162 before it can target a move above $170 – which would be significant and open the door to over $186. Notably, the 40 brokers that cover Airbnb believe the stock can climb over 30% in the next 12 months with an average target price of $198.

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