What Happened?

Shares of online accommodations platform Airbnb (NASDAQ:ABNB) jumped 15.9% in the morning session after the company reported strong fourth-quarter results: The top line was strong, with gross booking value, nights & experiences booked, and revenue all accelerating in growth from last quarter. Airbnb also blew past analysts' EBITDA expectations this quarter, showing that the growth is profitable as well. While revenue guidance for the next quarter missed, adjusted EBITDA margin guidance for the full year came in ahead. 

Overall, this quarter had some key positives. Following the results, Baird upgraded the stock's rating from Neutral to Buy, adding "Upgrading Airbnb to Outperform, following a strong finish to 2024, with Q1 likely the low-water mark for growth and margins in 2025, and significant platform expansion planned for later this year." 

Goldman Sachs also raised its rating from Sell to Neutral, noting, "As framed by management, the forward growth and margin trajectory of new investment initiatives will still need additional time to gain visibility, but we see a much lower probability (absent a change in macroeconomic environment that is less about ABNB fundamentals) of an estimate revision cycle that would cause the shares to underperform in that scenario."

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What The Market Is Telling Us

Airbnb’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. Moves this big are rare for Airbnb and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 16.6% on the news that the company reported second-quarter earnings results. Its bookings missed and its revenue guidance for next quarter missed Wall Street's estimates. The company said that "...we are seeing shorter booking lead times globally and some signs of slowing demand from U.S. guests." On the other hand, revenue beat slightly, and adjusted EBITDA beat by a more convincing amount. Overall, this was a mixed but weaker quarter for Airbnb.

Airbnb is up 22.7% since the beginning of the year, and at $161.29 per share, it is trading close to its 52-week high of $168.18 from March 2024. Investors who bought $1,000 worth of Airbnb’s shares at the IPO in December 2020 would now be looking at an investment worth $1,115.

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