Airbnb's Growth and Margins Under Pressure as Travel Rebounds

Airbnb (ABNB) is set to release its Q4 earnings on February 14, with investors eagerly awaiting the results.

The travel industry has by many accounts returned to pre-pandemic levels, which presents both opportunities and challenges for the home-sharing giant. With shares up more than 30% year-to-date, investors are watching for signals on how Airbnb sees demand playing out in the coming months, as questions about consumer resilience abound.

The Q4 2022 Report: What to Expect

The analysts has noted that travel demand remained stable through the fourth quarter and there is limited risk to Q4 numbers. However, investor concern is around whether ABNB can sustain the strong growth and margins seen in 2021 and 2022.

The company is in a supply-and-demand balancing act, as it needs to attract hosts to the platform while also attracting a substantial but commensurate demand from consumers.

The expected Q4 revenue is $1.86 billion with an expected adjusted EPS of 33 cents. Nights and experiences booked are expected to reach 90.1 million. However, the growth and margin could see headwinds as a return to pre-pandemic conditions could provide unexpected challenges for Airbnb, which benefited from work-from-home trends that saw employees "work from anywhere."

The 2023 for the Company

Investors are concerned that the 2023 growth and margin could see headwinds from average daily rates trending lower, less workforce flexibility, and recovery in urban travel.

Airbnb has been taking steps to bolster its supply of hosts, with making it easier for hosts to list on the platform being a key focus of the Winter Update. The company is expected to provide early learnings from the host-focused product rollout and any updates on supply growth.

Investors are concerned that the 2023 growth and margin could see headwinds from average daily rates trending lower, less workforce flexibility, and recovery in urban travel.

Airbnb has been taking steps to bolster its supply of hosts, with making it easier for hosts to list on the platform being a key focus of the Winter Update. The company is expected to provide early learnings from the host-focused product rollout and any updates on supply growth.

In August, Airbnb announced its first-ever buyback, worth $2 billion, so investors will likely be looking for a possible update. However, just because a buyback is announced doesn't mean it's fully executed.