Airbnb Jumps Nearly 14% After Reporting Its Most Profitable Quarter Ever

$0.25. Total bookings accumulated $13.5b, up 20% YoY. Net profit $320 million, 6 times more than previous than a year ago of $55 million. Net profit margin of 17%. Active Users historic high, and the company foresees this trend would continue throughout Q1 of 2023.

On the supply side, the company added another 900,000 listings for the year, up 16% YoY. And total listings reached 6.6million at the end of 2022. However, this part does not include Airbnb’s exit from China, so the actual increase is smaller. The report emphasizes that supply is driven by demand. More landlord are aware of the considerable income that Airbnb can bring and are willing to rent out their rooms. Inflation and recession fears have also strengthened the desire of landlords to find extra income-sources. Airbnb launched Airbnb Setup in November, allowing new hosts to have an one-on-one guidance from expert-hosts, until they have first their first guests. After the program was launched, new supply increased by 20%. The platform also allow new landlords to choose customers who often use Airbnb.

Airbnb is also looking for new source of listings, especially apartments. The CEO revealed that they currently have 175 apartment buildings, and the feedback from the landlords are satisfying, so this can provide a strong boost for the company's future development. The CEO also emphasized that most Airbnb hosts are former customers, and once their income increases, they will tell their family and friends to make them want to be hosts, so the entire listing network will grow by itself.

For employment, the CEO emphasized that the entire company has become smaller and more efficient after massive layoffs and re-structuring back in 2020. The CFO said that number of employees is 5% lower than from2019, but revenue is 75% higher.

Airbnb’s strong performance in the fourth quarter is tied to the recovery of traveling. From Visa and Mastercard’s reports, cross-border payments have increased significantly, but both giants mentioned that retaliatory tourism has begun to slow down in the short term. This would also be a short-term risk affecting Airbnb. However, from a long-term perspective, Airbnb's moat is getting stronger and stronger, because it’s difficult for Airbnb’s peers to accumulate 6.6 million listings, and Airbnb’s geographical flexibility is unmatched by any hotel brand. The company is also planning to develop the apartment listing market, which will undoubtedly provide a greater growth potential. In addition, after the company has gone through the epidemic, it has already gained a lot of operating leverage, so Airbnb should be a good investment in the long run. However, if a recession did come, pro-cyclical stock like Airbnb can be affected greatly, which can be a short-term risk.