Will Airbnb's Advanced Charging Offset Low Occupancy?

With travel still growing following the pandemic and a unique business model, Airbnb could be one of the companies to benefit in a high-interest environment.

Advanced Charging to Support Bottom Line

The airlines reported so far show that travel demand seems to be holding up despite inflation and other issues that could worry consumers. It's doing so well that the CEO of United Airlines does not believe a recession is in the cards. Those travellers have to stay someplace, and given recent performance metrics, it seems they continue to choose an Airbnb. The company most recently forecasted revenue to increase 17-23% in Q4, which would be 62-70% above 2019.

Airbnb's business model has another advantage in the current environment: Charging in advance allows the company to hold more cash, on which it can obtain interest. As the Fed tightens policy, Airbnb can receive higher interest from its cash holdings, directly supporting its bottom line. 

Headwinds from Low Occupancy, EU Regulation

While the company is optimistic about its outlook, there have been some curious cases of low occupancy, such as around the recent SuperBowl in Phoenix, Arizona, where hosts reported not as much demand as expected. However, it's unclear if this has more to do with pricing and supply than demand. 

After closing all of its listings in China, Airbnb faces some headwinds in the EU after proposed rules require it to store data at a single entry point in the EU. Following the earnings release last quarter, the CEO affirmed his commitment not to raise take rates and suggested that daily rates could moderate in 2023. Focus now turns to guidance for the first quarter, with winter typically a slower period for the company. Earnings expected to improve slightly compared to the prior year at $0.25, with better revenue of $1.9B.

Airbnb Reversed Up, Now Correcting 

Airbnb has completed a bearish impulse with an ending wedge pattern at $82 and reversed. In the near-term up, it rose to $121 on a bullish impulse, currently experiencing a pullback. If the stock price remains above triple digits, the next target above the recent peak lies at $130, then $150. But if the $111 and $100 supports succumb due to increasing momentum, Airbnb could slide towards the $87 for an inverse head-and-shoulders or the low of $82. In the latter case, chances of a record low will increase, with $80 and $70 coming into the spotlight.

Source: Spreadex

Key Takeaways

Airbnb is enjoying the benefits of a growing travel industry and its unique business model, which allows for advanced charging, resulting in higher cash holdings that can generate higher interest in a high-interest environment. However, there have been reports of low occupancy in some cases and proposed rules that could require data storage in the EU. The company is expected to report slight earnings improvement for Q1, with winter typically being slower.