Vacation-sharing platform Airbnb (NASDAQ:ABNB) posted Q2 2022 earnings that were roughly in line with its guidance, although investors were expecting better, causing the stock to fall by almost 8% in after-hours trading on Tuesday. Overall, we actually quite liked the numbers. While Airbnb’s revenue rose by 58% versus last year to $2.1 billion, nights and experiences booked rose by about 25% versus last year to 103.7 million, the strongest quarter on record. Average prices for bookings also rose marginally, with the company’s take rate standing at 12.4%. The topline growth is notable, given that there have been a host of macroeconomic headwinds over the quarter, with surging inflation putting pressure on household budgets and consumer confidence in the U.S. falling considerably. Moreover, the U.S. GDP actually contracted for the second consecutive quarter over Q2.
Airbnb’s business is also emerging solidly profitable, with net profits standing at $379 million, compared to a loss of $68 million in the year-ago quarter, as the company benefited from strong revenue growth, as well as the cost-cutting and efficiency improvements it carried out through the pandemic. Airbnb’s cash flows are also improving, with free cash flows for Q2 standing at a solid $795 million. The company says that it has generated $2.9 billion in free cash flows over the last 12 months, with its total cash balance standing at nearly $10 billion. In fact, the company has also indicated that it would repurchase about $2 billion in stock, indicating that it is increasingly confident about its long-term cash flow outlook.
So is Airbnb stock still a buy at current levels? We think it is. Based on the after-hours price of about $110 per share, Airbnb currently trades at just about 8x projected 2022 revenues, well below the 20x multiples it traded at its peak. The company’s near-term outlook is also looking strong, with the company guiding revenue of between $2.78 billion and $2.88 billion for Q3, ahead of street estimates. Airbnb could also be viewed as a more defensive bet on the travel industry even in the event of a prolonged downturn, compared to hotels, given its asset-light model and lower rates versus hotel rooms. We value Airbnb stock at about $145 per share. Our price estimate is about 30% ahead of the current market price. See our interactive analysis on Airbnb Valuation: Expensive Or Cheap? for more details. See our dashboard on Airbnb Revenue for an overview of Airbnb’s business model and how its revenues are likely to trend.
What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.
|S&P 500 Return||-1%||-14%||83%|
|Trefis Multi-Strategy Portfolio||0%||-13%||242%|
 Month-to-date and year-to-date as of 8/3/2022
 Cumulative total returns since the end of 2016
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.