Airbnb stock fell sharply despite outperforming earnings, and plans to buy back $2 billion in stock

Airbnb said Tuesday that it made a second-quarter profit as a public company, and that it’s so confident in its business that it’s buying back $2 billion of its stock.

“Our results for the second quarter show that Airbnb has achieved broad-based growth and profitability,” CEO Brian Chesky said during prepared remarks on the company’s earnings call.

Airbnb ABNB,
+ 4.62%
Shares fell as much as 9.5 percent after hours, after rising about 5 percent in the regular session, to close at $116.34. It has increased by 14% over the past five days.

The lodging company reported second-quarter net income of $379 million, or 56 cents per share, compared to a loss of $68 million, or 11 cents per share, in the same period last year. Revenue rose to $2.19 billion from $1.34 billion in the same quarter last year.

Analysts polled by FactSet had expected earnings of 45 cents per share on revenue of $2.1 billion.

Airbnb said demand for travel is strong just about everywhere. The company’s total bookings came to $17 billion, up 27% year over year, and 73% higher compared to the 2019 quarter that was pre-pandemic. Customers booked 103.7 million nights and experiences, an all-time high and a 24% increase compared to the 2019 quarter. The company said the total number of nights booked for cross-border travel continued to beat pre-pandemic levels, doubling compared to the same quarter last year.

Those numbers were lower than analysts’ expectations, despite 106.2 million nights and experiences booked and $17.13 billion in total bookings.

The company also reported that free cash flow for the second quarter was $795 million, the highest in the second quarter. This brings the total cash available to it to nearly $10 billion. On the conference call, Chief Financial Officer Dave Stephenson said the company doesn’t need that much cash on hand, which is why the stock is repurchased. Both he and Chesky said they remain committed to growing the business and will continue to invest in a high single-digit headcount this year.

Airbnb expects third-quarter revenue to come in at $2.78 billion to $2.88 billion, which it says it expects to be its highest to date. It also expects the revised Ebitda to be its highest to date, although it has not provided a number. Analysts, on average, expected earnings of $1.29 per share on revenue of $2.77 billion, and an Ebitda adjustment of $1.26 billion, according to FactSet.

Responding to analysts on the call who wanted to know the potential macroeconomic impacts on the business, Stevenson said, “We don’t know what the economy will bring, but we know Airbnb is resilient.” He noted that the company has different types of real estate listings. that it “already made difficult choices” in laying off employees at the start of the coronavirus pandemic; And it’s a “smaller, more compact machine”.

The company said the Asia-Pacific region “remained depressed” compared to the same period before the pandemic, and Stevenson expressed optimism about the upside once other regions were caught up in the recovery.

YipitData, which tracks active Airbnb listings, said it saw year-over-year growth in June in all regions except China — where the company pulled all of its listings due to difficulties doing business there, it announced in May. June listings in North America are up 19% year over year. Two regions, Latin America and the Middle East and Africa, saw 14% growth in June listings, according to YipitData.

Airbnb shares are down about 30% so far this year. By comparison, the S&P 500 SPX Index,
-0.67%
It’s down 13% year-to-date.

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