Airbnb Shares Rise 5.3% as US Inflation Eases, Company Makes AI Acquisition
Shares of online accommodations platform Airbnb (NASDAQ: ABNB) experienced a 5.3% increase in the morning session following the release of the latest inflation data by the Bureau of Statistics. The data revealed that US consumer prices rose 3.2% in October, slightly better than the anticipated 3.3%. This marks a decline from September’s 3.7% and June 2022’s peak of 9.1%.
Notably, key categories such as food at home, electricity, and gasoline rose even less than the overall inflation rate. In fact, gas prices actually decreased year on year. These figures suggest that inflation is gradually easing, which is positive news for both investors and consumers.
The Federal Reserve has been taking measures to combat inflation by raising interest rates, and the latest data indicates that their efforts might be paying off. However, it should be noted that inflation still remains above the Fed’s target of 2%. Nevertheless, the lower-than-expected inflation numbers could potentially afford the Fed more leeway to keep rates lower. Lower rates tend to benefit stock valuations, particularly in the technology sector where the market needs to factor in cash flows further into the future.
In addition to these macroeconomic factors, Airbnb announced its acquisition of AI startup Gameplanner.AI. Sources indicate that the deal is valued at just under $200 million. Gameplanner.AI was cofounded by Adam Cheyer, one of the founders of Siri. This acquisition could prove to be a valuable long-term investment as AI has the potential to enhance discovery on the platform, leading to an improved customer experience. Utilizing AI technology, users could better identify and discover listings that align with their preferences and requirements.
Given the volatility of Airbnb’s shares, which have seen 18 moves greater than 5% in the past year, today’s 5.3% increase indicates that the market considers this news to be meaningful but not something that would fundamentally alter its perception of the business.
Over the past year, the most notable move in Airbnb’s shares occurred six months ago when the stock dropped by 10.6% following the release of its first-quarter results. While the results exceeded analysts’ expectations in terms of gross bookings, revenue, earnings per share (EPS), and free cash flow, guidance for the next quarter fell below consensus. Weak operating income was attributed to changes in the timing of marketing expenses compared to the previous year. Additionally, the full-year 2023 EBITDA margin is expected to be similar to 2022, slightly below expectations and indicating that the company will not experience operating leverage on expenses this year. Overall, this quarter’s performance failed to meet expectations for the company’s future outlook.
Despite these fluctuations, Airbnb’s shares have risen by 47.5% since the beginning of the year. However, at $125.24 per share, the current trading price remains 18.3% below the stock’s 52-week high of $153.33 reached in July 2023. Investors who purchased $1,000 worth of Airbnb’s shares in the initial public offering (IPO) in December 2020 would currently be looking at an investment worth $865.21.
In conclusion, Airbnb’s shares saw a positive surge of 5.3% following the release of favorable inflation data. The gradual easing of inflation could provide the Federal Reserve with greater flexibility in terms of interest rates, potentially benefiting stock valuations. Additionally, Airbnb’s acquisition of Gameplanner.AI signifies a focus on utilizing AI technology to enhance user experience. While Airbnb’s shares remain volatile, this latest increase indicates that the market views the news as significant without fundamentally altering its perception of the company’s business.
