Airbnb reported earnings of $4.37 billion in the third quarter, boosted by a significant tax benefit and strong revenue from summer travel.

Unfortunately, the rental company’s prediction for fourth-quarter earnings did not meet the expectations of Wall Street.

The company’s stocks experienced a decrease of over 2% during after-hours trading.

Airbnb reported that without factoring in the tax benefit, their net profit would have been $1.6 billion, an increase from $1.2 billion in the previous year.

The company’s revenue increased by 18% to $3.4 billion due to a 14% rise in bookings and a small uptick in average prices for short-term rentals. According to a survey by FactSet, analysts predicted the San Francisco company to report a revenue of $3.37 billion.

Airbnb projected fourth-quarter earnings of $2.13 billion to $2.17 billion, falling short of analysts’ expectations of $2.18 billion.

The company stated in a letter to shareholders that they are observing increased instability in the beginning of the fourth quarter. They are closely keeping track of macroeconomic patterns and political tensions that may affect the demand for travel.

In the third quarter, Airbnb reported 113.2 million bookings for nights and experiences, which is 14% higher than the previous year and slightly exceeded analysts’ predictions.

However, the company stated that it anticipates a slower increase in the number of booked nights in the fourth quarter, compared to the third.

The mean price for rentals increased by 3% to $161 per day. According to Airbnb, the prices for one-bedroom listings, which have been a focus for the company, only went up by 1%. They stated that this was lower than the increase in hotel rates.

During a call with analysts, CEO Brian Chesky expressed that there is still room for our prices to become more competitive. He also mentioned that when hosts decrease prices, they often see an increase in profits.

Chesky stated that the addition of more listings, which saw a 19% increase compared to the previous year in the third quarter, particularly in Asia and Latin America, will also aid in keeping prices under control.

Airbnb has recently implemented updates to enhance transparency for consumers regarding the complete cost of a booking at an earlier stage in the searching procedure. Additionally, the company has provided hosts with additional details on the pricing of nearby listings, allowing them to more readily adjust their prices according to demand.

Source: wral.com