Why is the Airbnb Stock Price Sinking After Strong Earnings?

The Airbnb stock price crashed by more than 4% in premarket trading as investors reflected on the stellar company’s results. The shares dropped to $144, which is significantly lower than yesterday’s close of $150, bringing its total market capitalization to less than $90 billion.

Airbnb earnings

Airbnb is one of the biggest players in the travel industry. The company provides a two-way marketplace that allows individuals to provide their homes to guests. As all firms in the hospitality industry, the company went through a difficult period in 2020 as the global travel industry stalled. 

This year, however, things seem bright, helped by the strong bookings as countries continue their vaccination drive. Still, with the Delta variant spreading, the company faces significant challenges going ahead. 

The Airbnb stock price is slumping even after the company published strong quarterly results. The firm said that its Gross booking value more than quadrupled to more than $13.4 billion as people increased their bookings. The revenue came in at more than $1.33 billion, which was substantially higher than what analysts were expecting. Its non-GAAP EBITDA rose to more than $217 million.

Still, like all companies in the hospitality industry, Airbnb faces significant challenges ahead. For one, there are signs that the hospitality industry is cooling down as the Delta variant spreads. For example, Southwest Airlines has reported an increase in cancellations. In a note about Delta, the company’s management said:

“Now while we recognize the persistence of COVID and the Delta variant, we expect Q3 to be our strongest revenue quarter ever. The fact that we expect Q3 revenue to be our highest revenue quarter ever speaks to the inherent resiliency of our business.”

The premarket Airbnb share price action shows that investors are not convinced that the firm will beat its estimates in the quarter.

Airbnb stock price forecast

The four-hour chart shows that the ABNB stock price has been under pressure even as the hospitality sector rebounds. The stock has declined by more than 34% from its all-time high. It is also slightly below the key resistance at $157, which was the highest level on July 1. The shares are also below the 25-day and 50-day moving averages. It also seems like it has formed a bearish flag pattern. 

Therefore, the shares will likely being under pressure in the next few days. If this happens, the next key support to watch will be $130, which was the lowest level in July. On the flip side, a jump above this week’s high at $155 will invalidate the bearish view.

Airbnb Stock price