First Quarter Airbnb Revenue Snapshot: Here’s What You Need To Know
Airbnb (NASDAQ: ABNB) expects to release its first quarter results on Thursday, May 13. The online vacation rental market is emerging from an atrocious year in 2020 when the coronavirus pandemic effectively brought the travel industry to a halt. Now well into 2021, Airbnb is bracing for the inevitable travel rebound. It relies on vaccines currently being rolled out around the world to help people feel safer when they leave their homes.
This story is still in development and it remains to be seen if people are starting to travel again as they did before the pandemic. That’s why, when the company reports its first quarter earnings, the gross value of the reservation will be an important metric to consider.
Increasing supply is the key
Airbnb defines gross booking value (GBV) as the dollar value of bookings on its platform during a period, and it includes host revenue, service charges, cleaning fees, and charges. taxes, net of cancellations. This number, more than any other, will tell you how customer behavior is changing.
Rather than sitting around and waiting for people to start traveling with as much enthusiasm as they did before the COVID-19 pandemic, Airbnb is working on a campaign to increase the supply of ads on its platform.
Here’s what CEO Brian Chesky had to say on the company’s fourth quarter conference call in December 2020:
[In December], we launched our first large-scale marketing campaign in five years, made possible by Host. Even though the Airbnb brand [is] general public, the idea of hosting is not yet. … It will create more awareness around the idea of becoming a host by making it more current and more ambitious.
In addition to the marketing campaign, Airbnb is also making it easier for hosts to sign up by streamlining the onboarding process and providing tools and support to new hosts to help them overcome startup difficulties.
This makes good sense. More options on where to stay will increase the likelihood that potential travelers will find what they’re looking for and make a reservation. Additionally, since 23% of hosts were previously guests, adding more hosts to its platform will fuel this virtuous cycle. Another benefit of increasing supply is that it can potentially lower the prices that customers pay. With lower prices, users of its platform can choose to travel more often and maybe even list their place on Airbnb when they are away from home.
If Airbnb is successful in increasing the ad supply in the first quarter, that should translate into a rebound in GBV. All the demand from customers around the world will not help unless there is a supply to meet that demand. For this reason, GBV is the most important metric you’ll want to know when Airbnb reports earnings results.
What this could mean for investors
Wall Street analysts expect Airbnb to report revenue of $ 711.44 million and earnings per share of $ 1.17. The share price is down about 3% since the start of the year. Interestingly, Airbnb is trading at a forward price-to-sell ratio of 18.37, down 33% from its high of around 27 it was trading at in late February.
If its stock price drops even further after the earnings report, it could be a buying opportunity for long-term investors looking for high-risk, high-yield stock. This is, of course, if there is no unfavorable reason for lowering the price.
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