Why Airbnb shares are down despite ‘biggest and most profitable quarter ever’

Airbnb had a stellar third quarter, indicating consumers have continued traveling despite inflationary concerns. But the home-sharing giant offered a disappointing outlook for bookings in the fourth quarter, sending shares down more than 7% in after-hours trading.

The company expects nights and experiences will “moderate slightly” compared to the third quarter’s 25% growth. Airbnb also guided fourth-quarter revenue between $1.80 billion and $1.88 billion, putting the low-end of that range below analyst expectations.

That guidance overshadowed what the company said was its “biggest and most profitable quarter ever,” which exceeded Wall Street’s estimates.

“Because many people are now working from home, the mall is now Amazon, the movie theater is now Netflix, people still want to get out of the house. They still want to have meaningful experiences,” CEO Brian Chesky said on a call with investors. “I think that’s why they continue to turn to Airbnb.”

Airbnb reported revenue of $2.9 billion, up 29% from the same quarter a year ago and better than expected. It also earned $1.2 billion in net income, which is up 46% year-over-year.

The summer travel season has historically been one of Airbnb’s best periods, as families and students often plan their vacations within the third quarter. Airbnb’s nights and experiences grew to 99.7 million year-over-year in that quarter.

The company said its third-quarter results were also bolstered by continued long-term stays, as well as recovery in cross-border and urban travel. Airbnb is also seeing “strong growth” in the number of new hosts on the platform as people look to earn extra income.

“Regardless of continued macro uncertainties, we believe we’re well positioned for the road ahead,” the company said in its shareholder letter.