Airbnb posted strong Q3 results last week. Revenue in July-September grew by almost 70% year-on-year and reached a record value of $ 2.2 billion compared to $ 1.3 billion in the same period a year earlier. Market consensus predicted an increase in the indicator to $ 2.06 billion. It is important to note that revenue exceeded the figure for the third quarter of 2019 – before the start of the coronavirus pandemic – by 36%. The total volume of orders of the company increased by 48%, to $ 11.9 billion.
Adjusted EBITDA in July-September increased by 120% year-on-year to $ 1.1 billion. Airbnb’s net income in the last quarter grew by an impressive 220% year-on-year to $ 834 million, or $ 1.22 per share, up from $ 219 million a year earlier. The market expected the company’s net profit at $ 478 million, or 72 cents per share. In the fourth quarter, the company expects to generate revenue in the range of $ 1.39 billion to $ 1.48 billion, while market consensus expects a figure of $ 1.44 billion.
We keep our estimate for Airbnb shares at $ 220. We believe Airbnb’s share of the alternative housing market will continue to grow from 8% in 2021 ($ 48 billion) to 11% in 2026 ($ 126 billion). According to our financial model, Airbnb’s revenue could rise to $ 19 billion by the end of 2026, EBITDA could reach $ 8 billion, and earnings per share could rise to levels above $ 8.
Airbnb’s scale and brand awareness in the apartment and home rental business gives the company a distinct competitive edge in increasing its online booking share, especially among the younger generation. The uniqueness of the company lies in the direct traffic combined with a large base of rental hosts registered on the company’s platform. As the rate of vaccination of the world’s population rises and borders open to travelers, the potential for the company’s revenue growth increases significantly. We also believe Airbnb may expand into new segments of the travel market, such as traditional hotel bookings.
Airbnb is the largest major online travel company focused primarily on short-term apartment and home rentals with $38B in lodging bookings in ’19A as well as the fastest growing company (+30% y/y in ’19A) in the space. The company offers over 5.6M active rental listings, the majority of which are exclusive to Airbnb. The company also offers hotel stays via its subsidiary Hotel Tonight as well as unique tours and experiences. Based in San Francisco, Airbnb operates its short-term rental booking site and app in approx 100,000 cities in over220 countries globally.