PreMarket Prep Charts Airbnb's Q3 Earnings Descent: Why It Could Be A 'Risk-On' Play

Many of the leisure stocks have rallied along with the broad market since mid-October. The reason: many of them fall into the value/low price-to-earnings category. One issue in the sector with that characteristic is Airbnb Inc ABNB which is deep in the red following its third-quarter report. The price action in the issue makes it the PreMarket Prep Stock of the Day.

Sellers Ahead Of Airbnb's Report: The Street was leaning the right way heading into Airbnb’s third-quarter report. After peaking Oct. 26 at $119. 91, it declined to $106.67 on Monday. It rebounded to end Tuesday’s session at $109.05.

Airbnb's Q3 Beat, Cautious Q4 Guidance: After the close on Tuesday, the company reported quarterly earnings of $1.79 per share, which beat the analyst consensus estimate of $1.45 by 23.45%. The company reported quarterly sales of $2.88 billion, which beat the analyst consensus estimate of $2.84B by 1.55%.

At the same time, the company said it expects growth in nights and experiences booked will moderate slightly in the fourth quarter relative to the third, adding that average daily rates will face pressures from forex headwinds and business mix.

PreMarket Prep's Take: When the issue was being covered on the show it was already in the red by $7 at the $102 area.

“I have liked this company for a while, just have not pulled the trigger. I have been eyeing this $100 area for quite some time," said co-host Dennis Dick.

Airbnb is making money and could grow into its valuation, he said.

“If I was in the risk-on mode and looking for something in the growth sector, this may be my choice.”

The author of this article did not see much positive about the chart and alerted investors that the after-hours low was $98.08.

ABNB Price Action: After a much lower opening Wednesday ($102.65 vs, $109.05), the issue mounted a rally to $104.98 and sharply reversed course. As of 1:30 p.m., it had surpassed the premarket low reaching $97.51 and was attempting to remain in the $98 handle.

The stock ultimately lost 13.43% Wednesday, closing at $94.41. 

Airbnb has shown some relative strength over the last few months, as the issue has yet to exceed its June/July lows during the October retreat.

Munster Finds A Positive: Gene Munster, managing partner of Loup Ventures did find a silver lining in Airbnb's report. Munster tweeted:

What jumped out to me from Airbnb earnings is stays of 28 days or more made up 20% of bookings in the Sept quarter, unchanged from a year ago.

This is evidence that hybrid work remains the norm. Positive for $AAPL and $ZM.

— Gene Munster (@munster_gene) November 2, 2022

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

Photo courtesy of Airbnb.