KEY TAKEAWAYS
- Shares in Airbnb, which posted higher-than-estimated earnings Thursday, are surging in morning trading Friday, as the company invoked Amazon’s do-everything retail approach with plans to move well beyond just being a vacation rental app.
- Airbnb,, which swung to a bigger-than-expected quarterly profit, said Thursday that is it investing between $200 million and $250 million to launch and scale up “new businesses” later this year,
- Citi analysts stuck with their buy rating on Airbnb following the results and raised their target price to $170 from $158.
Airbnb (ABNB) shares are surging around 13% in morning trading Friday, as the company invoked Amazon’s (AMZN) do-everything retail approach with plans to move well beyond just being a vacation rental app.
Airbnb, which swung to a bigger-than-expected quarterly profit, said Thursday that it is investing between $200 million and $250 million to launch and scale up “new businesses” later this year, a move that would see it expand beyond just short-term rentals. It didn’t elaborate on what these businesses are, but Chief Executive Officer (CEO) Brian Chesky referred to online retail giant Amazon, which in recent years has made the bulk of its operating income from its AWS cloud services platform.
“We want the Airbnb app kind of similar to Amazon to be one place to go for all of your traveling and living needs,” Chesky said in a transcript of the earnings call provided by AlphaSense. “A place to stay is just really, frankly, a very small part of the overall equation.”
Airbnb’s Chesky Hopes New Businesses Would Garner $1B in Revenue
Chesky noted how Amazon started with books then offered products with “adjacency” like DVDs and CDs and then toys and then “things pretty far adjacent” from media and books. He said Airbnb’s first products will be “adjacent to travel“ so that consumers use the app once or twice a week eventually as opposed to the typical once or twice a year at present.
Chesky said he would like to see each of Airbnb’s new businesses make $1 billion in revenue eventually and plans to launch one or two new endeavors every year for the next five years.
On Thursday, the company posted results that showed it had turned a profit and grew its revenue by 12% during the fourth quarter. Citi analysts stuck with their buy rating on Airbnb following the results and raised their target price to $170 from $158, citing a relatively healthy broader travel market, intact margins and its newer products.