Abdelrahman
Key Takeaways
- Airbnb’s shares surged significantly in Friday’s morning session after the company reported earnings that exceeded expectations. The firm revealed plans inspired by Amazon to expand its services beyond just vacation rentals.
- The company, which reported a larger-than-anticipated quarterly profit, announced plans to invest between $200 million and $250 million to establish and expand “new businesses” later this year.
- Citi analysts reiterated their “buy” recommendation for Airbnb following these results, increasing their target price from $158 to $170.
Airbnb (ABNB) shares experienced a surge of approximately 13% during Friday morning trading after the company announced plans to diversify its offerings, drawing parallels to Amazon’s comprehensive retail model.
Following a surprise quarterly profit that exceeded expectations, Airbnb confirmed its intent to dedicate between $200 million and $250 million towards launching and enhancing new ventures later this year, signaling ambitions beyond just short-term rental services. While specifics were not disclosed, CEO Brian Chesky referenced Amazon’s success in pivoting to profit largely from its AWS cloud services over recent years.
Chesky stated, “We envision the Airbnb app evolving into a one-stop solution for all travel and living needs, much like Amazon. Finding a place to stay is just a fraction of the service we aim to provide,” as noted in the earnings call transcript shared by AlphaSense.
Chesky’s Ambition for New Revenue Streams
Chesky drew comparisons with Amazon’s journey from selling books to offering a diverse range of products. He indicated that Airbnb’s initial offerings will be closely related to travel, with the aim of increasing user engagement with the app from its current usage of once or twice a year to once or twice a week.
The CEO expressed a goal for each of these new ventures to eventually generate $1 billion in revenue, with a plan to roll out one or two new initiatives annually over the next five years.
On Thursday, Airbnb reported a successful financial performance, achieving a profit alongside a 12% revenue growth in the fourth quarter. Following this announcement, Citi analysts maintained a “buy” rating, raising their target price to $170 from $158, attributing their optimism to a robust travel market and the potential of its upcoming products.
