Airbnb Earnings Analysis Finds 'This Is The Kind Of Stock They Will Buy The Dip On': PreMarket Prep

The unusual second-quarter earning season continues with unpredictable price action following both good and bad reports.

For the most part, the “buy the dip” mentality has continued, with Airbnb Inc ABNB attracting some buying interest after its mixed second-quarter report.

Airbnb On The Rebound: Similar to many other growth stocks that came crashing down to earth this year, Airbnb found a bottom on June 30 at $86.71. Better yet, it put in a trio of lows in that same area the following day ($87.43) and the next one ($87.43).

So far, the rebound off that low was capped on Tuesday ($177.78) as well as the closing high for the rally ($116.34). That marks the highest level for the issue since it peaked on June 9 at $122.98.

Airbnb's Mixed Q2 Report: After the close on Tuesday, the company reported quarterly earnings of 56 cents per share which beat the analyst consensus estimate of 44 cents by 27.27%. This is a 609.09% increase over losses of 11 cents per share in the same period last year. Also, the company reported quarterly sales of $2.10 billion, which missed the analyst consensus estimate of $2.11 billion by 0.47%. This is a 57.3% increase over sales of $1.33 billion in the same period last year.

On a positive note, the company announced a $2-billion share buyback plan.

PreMarket Prep's Take On Airbnb: When the issue was being covered on the show Wednesday, it was trading at $109, which was $6 lower.

Co-host Dennis Dick was the first to comment: “This is the kind of stock they will buy the dip on.”

Dick said he'd like to have this kind of stock in his portfolio, but added: "I am just not comfortable with its valuation, but eventually it will grow into it."

The author of this article alerted investors to what would be needed to see higher prices early on in the session. That was the current rebound high off the premarket low ($103.34) at $110. If the buyers could push the issue above that level, it could easily trade into Tuesday’s range ($111.10-$117.79).

ABNB Price Action: After a much lower open ($108.23 vs. $116.34), the issue immediately bottomed at $108 and embarked on a vicious rally.

Not only did the issue breach $110 with ease, it easily surpassed Tuesday's low ($111.10), but came up shy of Tuesday’s close ($116.34), only reaching $114.65.

As of Wednesday afternoon, Airbnb has backed off from that high and is attempting to get back in the $114 handle.

The discussion on the issue from Wednesday’s show can be found here:

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Photo courtesy of Airbnb.