Airbnb Posts Record Quarterly Net Profit... Stock Declines Amid Regulatory Risks

Q2 Earnings Announcement
Sales and Net Profit Both Exceed Expectations

Accommodation sharing company Airbnb posted surprising earnings that exceeded market expectations, driven by increased demand for overseas travel. Although it recorded the highest quarterly net profit ever, concerns over regulatory backlash have caused its stock price to decline in after-hours trading.

On the 3rd (local time), Airbnb announced in its earnings report that its net profit for the second quarter of this year reached $650 million (approximately 845 billion KRW), marking the highest quarterly performance in its history. This represents a 72% increase compared to the same period last year and significantly surpassed the market consensus of $537 million. Revenue for the same period was $2.5 billion, an 18% increase from $2.1 billion in the previous year. Earnings per share stood at $0.98.

The strong second-quarter performance was driven by increased demand. The company stated that the number of stays in the second quarter was 115.1 million, up 11% from the same period last year. The number of stays showed double-digit growth due to the transition to a COVID-19 endemic and the summer peak season.

Airbnb recorded the highest quarterly net profit and expects strong performance to continue into the third quarter due to increased bookings. The third quarter, which includes the summer vacation months (July to August), is considered the peak season for the travel industry.

The company set a revenue target of $3.3 to $3.4 billion for the third quarter. This represents 14-18% growth compared to the same period last year, with the midpoint ($3.35 billion) exceeding the market consensus of $3.22 billion.

[Image source=AP Yonhap News]

Despite the surprising earnings, the stock price is declining. This is attributed to heightened regulatory risks ahead of the implementation of the 'Accommodation Sharing Regulation Act' in Airbnb’s major market, New York, USA. The law, effective from September, requires New York residents who rent out their primary residence for short-term stays of 30 days or less to mandatorily report the landlord’s personal information, rental income, and account details. Based on this information, the state and city are expected to impose tourism, sales, and hotel taxes, which will inevitably impact Airbnb’s performance.

As of the end of January, there were about 38,500 Airbnb listings in New York, with short-term rental revenue recorded at $85 million since last year. With this key high-revenue market becoming a regulatory target, Airbnb has filed a lawsuit challenging the New York law, escalating the issue into a litigation risk, according to foreign media reports.

On the day, Airbnb’s stock closed down 2.55% in regular trading on the New York Stock Exchange and was down 1.33% in after-hours trading as of 8 a.m. Korean time.