Airbnb Sends Investors Packing While Shares Sell Off After Q3 Net Income Drops By 68% From A Year Ago

In its third quarter financials, Airbnb (ABNB) missed on earnings but beat on revenues. Its Nights and Experience Booked accelerated throughout Q3 into Q4, returning to double-digit growth by the end of Q3. Revenue grew 10% year-over-year to $3.7Bn while net income was $1.4Bn, down from $4.4Bn a year ago. Additionally, Airbnb generated $1.1Bn of free cash flow, and $4.2Bn remaining on its repurchase authorization.

Looking ahead to Q4, the company is anticipating that nights booked will accelerate in Q4 relative to Q3, despite harder y/y comparisons in the back half of the quarter. The company continues to focus on its three strategic initiatives: making hosting mainstream, perfecting its core service, and expanding beyond its core business. The company is also investing in improving listing quality, introducing new features like the Co-Host Network, and expanding into new geographic markets.

On its conference call the company shared its forward focus on improving quality and reliability of its listings, including removing over 300,000 low-quality listings and highlighting the best listings through the “Guest Favorites” program. An additional focus will be the launch of the “Co-Host Network” which allows people to easily find experienced hosts to manage their Airbnb listings, which Airbnb expects to unlock millions of new listings. Airbnb also intends to expand beyond its core accommodations business and launch new products and services that could generate $1Bn or more in revenue each year.

A couple concerns the company cited were around regulations in certain markets like New York City that have banned Airbnb, though Airbnb remains optimistic about finding solutions. Also, there is some uncertainty around the pace and scalability of the company’s plans to expand into new service offerings beyond accommodations.