Is AirBnb, taking the lion share in the alternative acommodation
After finding a bottom at the end of 2022, the price shifted into a bullish intermediate trend. Since then there have been two waves of higher lows and higher highs playing out in almost the same timeframe and each wave was with a diminishing magnitude than the previous one.
In continuation of the pattern I expect the next wave to be of a lesser move and a high of around $170. A more optimistic outlook places a secondary target at $181.
The price currently maintains a favorable position, comfortably trading above both the 50-day moving average (blue-line) and the 200-day moving average (orange-line). Furthermore, the recent crossover of the 50MA above the 200MA reinforces the prevailing bullish sentiment.
Q4 and Full-Year 2024 Financial Performance
The company posted its latest earnings report on the 13th of February. They closed 2023 with a robust financial performance, reporting record-high fourth-quarter metrics and achieving significant year-over-year growth in revenue.
Q4 revenue was $2.2 billion, up 17% year-over-year also it was their best Q4 ever. This number was driven by a record 99 million Nights and Experiences Booked, a modest increase in the Average Daily Rate (“ADR”), and an FX tailwind.
The company reported Net Loss for Q4 of $349 million, including non-recurring tax withholding expenses and lodging tax reserves of approximately $1 billion. The Adjusted Net Income excluding those expenses and applying a long-term effective tax rate of 21%, was $489 million compared to $319 million in Q4 2022. This was mainly driven by strong revenue growth, expense discipline, and interest income, resulting in a 22% Adjusted Net Income Margin.
Other Business Highlights for 2023:
Some of the main points from their recent earnings call made by the company Co-founder and CEO Brian Chesky:
Airbnb's push to make hosting more mainstream shows how important it is to keep hosts engaged to keep the platform growing. So it is very important to make Airbnb look attractive to people who might want to host. And with listings growing by double digits across different regions, Airbnb is managing to meet the rising demand for places to stay.
Improving their core service is all about making the guest experience better. They're constantly improving the user experience and are doing things like being more transparent about prices to build trust with users and keep them coming back.
Airbnb's move into the experiences vertical shows they're aiming for bigger growth. By focusing on markets where they're not as big yet and investing in AI, they're trying to find new ways to make money and become a one-stop-shop for travel.
Their success in breaking into new markets proves they can adapt to what people want in different places. Using the same successful strategies in new areas to grab more of the market and grow even more.
And with the aquisition of GamePlanner.AI is all about leveraging AI to make sure users find what they're looking for and get personalized recommendations, which will help them stay ahead of the competition.
Bull Case:
Bears Cases:
Final thoughts:
As we look ahead for Airbnb, there's a sense of optimism on both its recent performance and its long-term potential. The way the stock has been trending, there's this steady momentum building up.
What’s more, when you step back and look at the bigger picture, you see Airbnb as this powerhouse in the travel world. Their unique approach, their way of connecting people with places to stay, is making Airbnb a synonym for traveling in younger generations. And with things looking up on the technical side and the fundamental strengths they've got going, it's hard not to feel bullish about where they're headed.
In continuation of the pattern I expect the next wave to be of a lesser move and a high of around $170. A more optimistic outlook places a secondary target at $181.
The price currently maintains a favorable position, comfortably trading above both the 50-day moving average (blue-line) and the 200-day moving average (orange-line). Furthermore, the recent crossover of the 50MA above the 200MA reinforces the prevailing bullish sentiment.
Q4 and Full-Year 2024 Financial Performance
The company posted its latest earnings report on the 13th of February. They closed 2023 with a robust financial performance, reporting record-high fourth-quarter metrics and achieving significant year-over-year growth in revenue.
Q4 revenue was $2.2 billion, up 17% year-over-year also it was their best Q4 ever. This number was driven by a record 99 million Nights and Experiences Booked, a modest increase in the Average Daily Rate (“ADR”), and an FX tailwind.
The company reported Net Loss for Q4 of $349 million, including non-recurring tax withholding expenses and lodging tax reserves of approximately $1 billion. The Adjusted Net Income excluding those expenses and applying a long-term effective tax rate of 21%, was $489 million compared to $319 million in Q4 2022. This was mainly driven by strong revenue growth, expense discipline, and interest income, resulting in a 22% Adjusted Net Income Margin.
Other Business Highlights for 2023:
- Host community grew to 5 million globally.
- Q4 supply growth increased by 18% year-over-year, resulting in more than 7.7 million active listings by the end of 2023.
- Share repurchase of $2.25 billion during the year.
- Nights and Experiences Booked grew by 12% compared to the previous year aided by a record Q4 with 99 million bookings.
- The App accounted for 55% of gross Nights Booked which is 5% increase from the previous year.
Some of the main points from their recent earnings call made by the company Co-founder and CEO Brian Chesky:
- Focus on improving the host experience led to significant growth in the host community and active listings.
- Introduction of new features and upgrades (like Guest Favorite, Listing Tab, and transparent pricing) enchanced the affordability and reliability for guests.
- Strategic expansion efforts yielded positive results in underpenetrated international markets such as Germany, Brazil, and Korea.
- An acquisition of GamePlanner.AI to advance their AI capabilities.
- Dave Stephenson (current CFO) was appointed as Airbnb's Chief Business Officer and Ellie Mertz was appointed as CFO, effective March 1, 2024.
- New share repurchase authorization of up to $6 billion of Class A common stock
- Continuing focus on making hosting mainstream to drive further growth in the host community.
- Strategic expansion beyond the core business into underpenetrated international markets.
- Emphasis on leveraging AI technology to develop innovative and personalized interfaces.
- Continued investment in new features and upgrades to enhance the platform's functionality.
- Long-term vision to offer more than just accommodation, aiming to become a comprehensive travel platform.
Airbnb's push to make hosting more mainstream shows how important it is to keep hosts engaged to keep the platform growing. So it is very important to make Airbnb look attractive to people who might want to host. And with listings growing by double digits across different regions, Airbnb is managing to meet the rising demand for places to stay.
Improving their core service is all about making the guest experience better. They're constantly improving the user experience and are doing things like being more transparent about prices to build trust with users and keep them coming back.
Airbnb's move into the experiences vertical shows they're aiming for bigger growth. By focusing on markets where they're not as big yet and investing in AI, they're trying to find new ways to make money and become a one-stop-shop for travel.
Their success in breaking into new markets proves they can adapt to what people want in different places. Using the same successful strategies in new areas to grab more of the market and grow even more.
And with the aquisition of GamePlanner.AI is all about leveraging AI to make sure users find what they're looking for and get personalized recommendations, which will help them stay ahead of the competition.
Bull Case:
- AirBnb network has achieved a critical mass, driven by its dominant share in the alternative accommodation market and the ongoing diversification into the experiential vertical.
- The rapid growth in mobile app usage and Airbnb’s strong brand awareness contribute to approximately 90% of traffic coming directly or through unpaid searches to its platform.
- What’s more the trend of remote work is driving sustained growth into the long and mid-term travel demand, and AirBnb is well-positioned to benefit from it.
- PS: *As per their latest earnings call now more than two-thirds of the hosts offer a weekly or monthly discount.*
Bears Cases:
- Rivals such as Booking and Expedia are intensifying their investment in alternative accommodation supply and brand awareness in the U.S., posing a competitive challenge.
- Google's prioritization of paid advertisements and its metasearch platform over free organic search links may elevate marketing costs for Airbnb.
- Regulatory hurdles related to societal impact, safety concerns, and economic implications could impede the growth of alternative accommodations.
- Airbnb's operational model for individual host accommodations entails higher servicing costs compared to traditional hotels and other segments within the travel industry.
Final thoughts:
As we look ahead for Airbnb, there's a sense of optimism on both its recent performance and its long-term potential. The way the stock has been trending, there's this steady momentum building up.
What’s more, when you step back and look at the bigger picture, you see Airbnb as this powerhouse in the travel world. Their unique approach, their way of connecting people with places to stay, is making Airbnb a synonym for traveling in younger generations. And with things looking up on the technical side and the fundamental strengths they've got going, it's hard not to feel bullish about where they're headed.
If you want to learn algorithmic trading on a hedge-industry level -> bit.ly/3RDCI2q