Airbnb stock plunges despite falling earnings, plans to buy back $2 billion in shares

Airbnb Inc. said Tuesday that it had its first profitable second quarter as a public company and that it is so confident in its business that it is buying back $2 billion of its stock.

“Our second quarter results demonstrate that Airbnb has achieved growth and profitability at scale,” CEO Brian Chesky said during prepared remarks on the company’s earnings call.

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Shares fell as much as 9.5% after rising nearly 5% in the regular session to close at $116.34. They are up 14% in the last five days.

The lodging reservation company reported second-quarter net income of $379 million, or 56 cents per share, compared with a loss of $68 million, or 11 cents per share, in the prior period. Revenue rose to $2.19 billion from $1.34 billion in the prior quarter.

Analysts polled by FactSet had forecast earnings of 45 cents a share on revenue of $2.1 billion.

Airbnb said demand for travel is strong almost everywhere. The company’s gross bookings were $17 billion, up 27% year over year and 73% higher compared to the pre-pandemic 2019 quarter. Customers booked 103.7 million nights and experiences, the highest ever and a 24% increase compared to Q3 2019. Gross nights booked for cross-border travel continued to exceed pre-pandemic levels and doubled compared to in the year-ago quarter, the company said.

Those numbers fell short of analysts’ expectations, however, of 106.2 million room nights and booking experiences and $17.13 billion in gross bookings.

The company also reported that its free cash flow for the second quarter was $795 million, the highest level for the second quarter. That brings his total cash to nearly $10 billion. On the conference call, Chief Financial Officer Dave Stephenson said the company doesn’t need as much cash on hand, which is why it’s buying stock. He and Chesky both said they remain committed to growing the business and will continue to invest in growing headcount by high single digits this year.

Airbnb expects third-quarter revenue of $2.78 billion to $2.88 billion, which it says it expects to be its highest ever. It also expects adjusted Ebitda to be its highest yet, though it did not provide a number. Analysts on average had forecast earnings of $1.29 per share on revenue of $2.77 billion and adjusted Ebitda of $1.26 billion, according to FactSet.

In response to analysts on the call who wanted to know about possible macroeconomic impacts on the business, Stephenson said “we don’t know what the economy is going to bring, but we know Airbnb is resilient.” He noted that the company has different types of property listings. that it had “already made tough choices” to lay off workers at the start of the coronavirus pandemic; and that it is “a leaner, tighter machine”.

The company said the Asia-Pacific region “remained depressed” compared to the same period before the pandemic, and Stephenson expressed optimism about the upside once other regions catch up.

YipitData, which tracks Airbnb’s active listings, said it saw year-over-year growth in June in all regions except China — where the company has pulled all of its listings due to difficulties doing business there, it announced in May . June listings in North America were up 19% year over year. Two regions, Latin America and the Middle East and Africa, each saw a 14% increase in June listings, according to YipitData.

Shares of Airbnb are down about 30% so far this year. By comparison, the S&P 500 SPX,
is down 13% year-to-date.

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