San Francisco-based Airbnb (NASDAQ:ABNB) provides the go-to home-sharing and homestay network for many travelers. There’s a lot going on with the company now. Some of what you’ll hear about Airbnb might not sound positive at first, but it’s important to get the full story. In the end, there’s still a compelling argument to buy ABNB stock.
Top of mind for some Airbnb investors now is the summer travel season. Covid-19 and monkeypox are concerns, of course, but they probably won’t stop many folks from traveling, and that’s bullish for Airbnb.
Summer’s arrival isn’t the only consideration with Airbnb, though. Prospective investors have a lot to think about — not the least of which is a tough choice that Airbnb made recently, which could have a profound impact on the company’s balance sheet.
What’s Happening with ABNB Stock?
Since Airbnb’s initial public offering, ABNB stock traders have pushed the share price up to $200 on multiple occasions. It has been a strong resistance level and could be a good place to take profits someday.
More recently, Airbnb shares traded near the $120 level. So, is this a terrific discount, or just a value trap? To help answer this question, we can look at the hard data.
During 2022’s first quarter (Q1), Airbnb recorded $102.1 million in “nights and experiences booked,” up 59% year-over-year. In that same quarter, Airbnb’s gross booking value increased 67% to $17.2 billion. Additionally, the company’s revenue surged 70% to $1.5 billion. Not too shabby, wouldn’t you agree?
Granted, Airbnb incurred a $19 million net earnings loss in Q1 of 2022. However, this indicates a narrowing loss compared to the prior-year quarter’s $1.2 billion loss. Hence, the company is improving in this area.
Easy Choice, Tough Choice
So far, we’ve shown that Airbnb is doing reasonably well, financially speaking. Next, prospective investors should know about a couple of significant changes that Airbnb has made.
The first change is definitely a positive one — though it’s not listed on Airbnb’s press releases page, interestingly enough. In any case, Airbnb co-founder and Chief Executive Officer Brian Chesky has revealed the “the biggest change to Airbnb in a decade.”
It’s called Airbnb Categories. Apparently, Airbnb’s travelers will have 56 new categories of temporary residences to choose from. Through Categories, Airbnb users might discover homestay locations they wouldn’t otherwise have considered.
Now, here’s the more difficult change that Airbnb is making. Evidently, starting Jul. 30, the company is pulling its domestic business out of China.
Surely, it wasn’t an easy decision to remove approximately 150,000 Chinese Airbnb listings. This might seem like a disappointment, but it could help to prevent Airbnb’s financial struggles in China as the nation implements Covid-19 lockdowns.
It has been reported that mainland China is one of Airbnb’s least profitable markets. Staying there could be a money-losing proposition now, so it’s conceivable that Airbnb is doing what’s necessary from a business perspective.
What You Can Do With ABNB Stock Now
Could ABNB stock revisit $200 in the near future? It’s entirely possible as the company is demonstrating powerful revenue growth.
At the same time, Airbnb is making big changes that prospective investors need to be aware of. Still, after learning about the company’s latest developments, Airbnb’s shareholders should remain confident in the company and ready for long-term profits.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.