### Airbnb Shares Rise as US Inflation Eases and AI Acquisition Boosts Prospects
Shares of online accommodations platform Airbnb (NASDAQ:ABNB) experienced a 5.3% surge in the morning session following the release of the latest inflation data from the Bureau of Statistics, which revealed that US consumer prices rose by 3.2% in October. This figure is slightly better than the expected 3.3% and represents a decline from September’s 3.7% and the peak of 9.1% recorded in June of last year. Excitingly, key categories such as food at home, electricity, and gasoline rose even less than the headline figure of 3.2%, with gas prices actually decreasing year on year. These numbers suggest that inflation is gradually easing, which is positive news for both investors and consumers.
The Federal Reserve has been steadily raising interest rates in an effort to combat inflation, and the latest data indicates that their efforts may be paying off. While inflation is still above the Fed’s target of 2%, the lower-than-expected numbers could provide the Fed with more room to keep rates lower. This is particularly advantageous for stock valuations, as lower interest rates act as a tailwind, especially benefiting tech companies where the market needs to discount cash flows further into the future.
In addition to these macroeconomic tailwinds, Airbnb announced its acquisition of AI startup Gameplanner.AI, a deal valued at just under $200 million, according to CNBC, which cited unnamed sources. Gameplanner.AI was co-founded by Adam Cheyer, one of the original founders of Siri. This acquisition holds the potential to be a helpful and long-term positive for Airbnb, as AI technology has the ability to enhance the platform’s discovery features, leading to an improved customer experience. For instance, while hotels typically offer a limited number of room types, sizes, and layouts, Airbnb listings are all unique, often accompanied by associated reviews. AI and machine learning could play a role in helping users better find and surface listings that align with their preferences and specific needs.
Given Airbnb’s volatile nature, with 18 moves greater than 5% in the past year, today’s 5.3% increase suggests that the market deems this news to be meaningful but not necessarily a game-changer that would fundamentally alter its perception of the business.
Over the past year, the most significant move in Airbnb’s shares occurred six months ago when the stock dropped 10.6%. This decline came following the company’s first-quarter results, which surpassed analysts’ expectations for gross bookings, revenue, earnings per share (EPS), and free cash flow. However, the company’s guidance for room nights, revenue, and adjusted EBITDA for the subsequent quarter fell below consensus estimates. The weak EBITDA guidance was attributed to changes in the expected timing of marketing spend relative to the prior year. Moreover, the full-year 2023 EBITDA margin is projected to be similar to that of 2022, slightly falling below expectations and indicating that the company will not experience operating leverage on expenses this year. Overall, the outlook for the business presented a negative quarter for Airbnb.
Although Airbnb’s shares have risen by 47.5% since the beginning of the year, the current trading price of $125.24 per share still stands 18.3% below its 52-week high of $153.33, reached in July 2023. Investors who bought $1,000 worth of Airbnb shares at the IPO in December 2020 would now be looking at an investment worth $865.21.
Airbnb remains a company of interest to many investors, and the latest developments regarding easing inflation and the acquisition of Gameplanner.AI have generated optimism. As always, it is essential to closely monitor market conditions and obtain a comprehensive analysis of the company before deciding to invest.
*Full analysis report: [Access here]*
**Sources:**
[Link 1](***link***)
[Link 2](***link***)
