Your portfolios in brief
This week, we chose to talk to you about Airbnb stock. The company filed impressive results on Tuesday, posting its best holiday season ever and its first profitable year in 2022, making $8.4 billion in revenue (up 40% year-over-year) as its revenue grew 24% in the fourth quarter.
Here are the takeaways from Airbnb's quarterly report, compared to analyst estimates compiled by Bloomberg:
- Fourth quarter revenue: $1.9 billion actual versus $1.86 billion expected
- Fourth quarter adjusted EBITDA: $506 million actual versus $435.3 million expected
- Q4 room nights and booked experiences: 88.2 million actual vs. 90.1 million expected
- First quarter 2023 revenue forecast: $1.75 billion to $1.82 billion actual vs. $1.68 billion expected
In its letter to shareholders, Airbnb said it distinguishes continued strong demand in early 2023 and expects to record first-quarter revenue of between $1.75 billion and $1.82 billion. Thus, the forecast for the next few months is interesting as the summer season should be more than profitable for the company. According to Brian Chesky, the company's CEO, users are "booking more and more in advance".
The number of rental units has increased by 16% over the past year. As times get tougher economically, many have decided to rent out their homes to replenish their wallets. In addition, Airbnb has improved its platform, providing users with a simpler interface allowing Airbnb to increase its offerings.
Its stock is up more than 57% this year, outpacing other online travel giants such as Expedia Group Inc. and Booking Holdings Inc. which, in turn, are up more than 32% and 23%, respectively. The year 2022 was a record year for the company as despite the war in Ukraine, inflation and rising prices, people continued to travel. The booking rate for the fourth quarter increased by 20% and customers increased their number of booked nights compared to previous quarters.
Its stock was up 9% in after-hours trading Tuesday and ended Wednesday's session up 13.35%.
Market Brief
Expected at the beginning of the week, the data on inflation in the United States revealed a less significant slowdown than expected over a year, even accelerating over the month for the first time since October. Consumer prices rose 6.4% year-over-year, down slightly from 6.5% the previous month, but above the 6.2% expected by economists.
Following this report, markets reacted downward. Investors remain cautious about inflation, which continues to plague the markets. Despite a good start to the week, all three major indices continued to move into negative territory on Wednesday.
Philadelphia Fed President Patrick Harker said policymakers were approaching the point where rates were sufficiently restrictive: "In my view, we're not done yet...but we're probably close." So this comment offered investors a wind of optimism, diminishing losses and fears, not to mention that the U.S. job market is strong as the latest data showed employers added more than half a million jobs in January.
Despite the markets closing higher on Wednesday, the indices opened lower on Thursday, dragged down by new economic data. January's Producer Price Index rose 0.7% for the month, while analysts were expecting a 0.4% increase. The two pieces of data released this week offering insight into the inflation situation indicate that the battle against inflation is not over. Many investors are expecting a less accommodative Fed than anticipated, bringing volatility back to the markets.
"Inflationary data has been moving markets throughout the week. Several different Fed presidents shared their views on the economy this week. Some calmed investors with their comments while others created volatility. Thus, those with more hawkish comments were more likely to speak out, which moved the markets down," says our President and Portfolio Manager Philippe Pratte.
"As far as interest rate hikes are concerned, it is the status quo. We had anticipated two increases, one in March estimated at 25 basis points and another a few months later. In short, these two hikes are already priced into the markets. Thursday's pullback came several hours after the release of producer price data as the session was marked by higher options trading volume that added to the volatility already present at the start of the day. So, once again, a volatile week as inflation remains the topic of the day and will be for some time to come," said Philippe Pratte.
So here is the average for the week for the three major U.S. indices as of 1:30 p.m. Friday.
And here's the average for the week for the TSX in Canada.
Pratte Portfolio Management is a firm registered with the Autorité des marchés financiers (AMF) and the Ontario Securities Commission (OSC).
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