The Impact of Airbnb’s Current Quarter Guidance on Stock Performance

Investors in the short-term accommodation marketplace Airbnb (ABNB) witnessed a significant drop in share prices during extended trading on Wednesday following the company’s release of a weaker-than-expected current-quarter outlook. This overshadowed the positive news of first-quarter earnings and revenue that exceeded Wall Street expectations.

Key Takeaways

• Airbnb shares faced an 8% decline in extended trading due to disappointing current-quarter guidance.
• The company cited various factors contributing to a “significant sequential headwind” for the current quarter, including the timing of Easter and foreign exchange fluctuations.
• Investors should monitor the support zone between $141 and $148 on the chart for potential price movements.

For the upcoming quarter ending in June, Airbnb forecasts net sales between $2.68 billion and $2.74 billion, representing a growth rate of 8%-10% from the previous year. However, this guidance fell below Wall Street estimates, causing concern among investors.

In its shareholder letter, Airbnb highlighted the challenges it faces in the current quarter, including the timing of Easter, an additional leap-year day in the prior quarter, and fluctuations in foreign exchange rates. Despite these obstacles, the company anticipates accelerated revenue growth in the second and third quarters, driven by a surge in summer travel demand associated with major events like the Paris Olympics.

Solar Eclipse Boosts Bookings

During the first quarter ending March 31, Airbnb reported adjusted earnings of 41 cents per share, surpassing analysts’ expectations of 24 cents per share. Revenue for the period reached $2.14 billion, marking an 18% increase from the previous year and exceeding the consensus estimate of $2.06 billion.

Gross bookings totaled $22.9 billion, up 12% year-over-year, while nights and experiences booked on the platform rose by 9.5% to 132.6 million. The company attributed some of this growth to special events like the solar eclipse in North America, which drove user engagement and resulted in 500,000 guests booking stays during the event.

Chart Analysis and Post-Earnings Weakness

Following a peak in late March, Airbnb’s stock price has been consolidating around the 50-day moving average, indicating a lack of strong momentum from buyers or sellers. In light of the disappointing earnings report, investors should pay attention to the support zone between $141 and $148 on the chart.

This area, supported by the 200-day moving average and previous price action dating back to September last year, serves as a critical level for determining future price movements. A failure to maintain support could lead to a further decline towards lower levels around $126.

After-hours trading saw Airbnb shares fall by 8.4% to $144.58. Despite this recent setback, the stock had shown a 25% gain over the past 12 months leading up to this event.

It is important to note that the information provided in this article is for informational purposes only and does not constitute financial advice. Investors are encouraged to conduct their own research and consult with a financial advisor before making any investment decisions.

As of the date of writing, the author does not hold any positions in the securities mentioned above.

Original Source: Investopedia