Thursday's Headlines: Airbnb Shares Slump on Weak Guidance

Thursday's Headlines: Airbnb Shares Slump on Weak Guidance

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Chegg (CHGG) +22.0%

The New York Times (NYT) +7.4%

Huazhu Hotels Group (HTHT) +5.2%

Match Group (MTCH) +4.2% Group (TCOM) +3.9%

Moving Down ⬇️

Airbnb (ABNB) -13.4% (BILL) -10.7%

Twilio (TWLO) -10.2%

Cloudflare (NET) -10.1%

Atlassian (TEAM) -10.1%


Airbnb Shares Slump on Weak Guidance 🏠

Shares of Airbnb fell more than 13% yesterday after the company posted guidance that disappointed analysts.

For the third quarter, Airbnb beat analyst expectations on both the top and bottom line. Revenue for the quarter came in at $2.88 billion, up 29% year-over-year. Earnings came in $1.79 per share — 33 cents higher than analysts had expected. That was driven by a 25% jump in nights and experiences booked, as strong travel demand continued.

“Q3 was our biggest and most profitable quarter ever despite geopolitical and macroeconomic headwinds,” the company said in a statement.

However, investors were spooked by guidance for the fourth quarter. Management said they expected growth to moderate and gave revenue guidance in the range of between $1.80 billion and $1.88 billion.

The company said they "expect a continued, albeit choppy, recovery of cross-border travel to be a further tailwind to future results", but that economic factors, including inflationary pressure and a strong dollar, could impact growth.

Shares of Airbnb are currently down 45% year-to-date as investors have spurred high-growth technology stocks in favor of more stable investments.


Roku Beats on Earnings but Weak Outlook Punishes Stock 📺

Like the social media stocks before it, Roku’s earnings proved that advertising is a tough space to operate in thanks to the present economic climate. The streaming device maker, which has a lucrative advertising segment, managed to beat Q3 projections but adjusted its outlook for Q4 and investors went running.

Roku reported total revenue of $761.4 million, up 12% year over year, and easily beating analysts’ expectations of $694 million. It saw a net loss of $122.2 million (or 88 cents per share) compared to an anticipated net loss of $1.28 per share.

Streaming hours and accounts were also back on track after a slowdown in recent quarters due to the pandemic pull forward. Roku added 2.3 million “active accounts” compared to 1.3 million in the same quarter last year. Streaming hours totaled 21.9 billion in Q3 — up 1.1 billion from the prior quarter and an increase of 21% year-over-year. Additionally, thanks to the company’s recent push into original content, Roku’s own streaming channel saw streaming hours increase by 90%.

The pain really came through though when management discussed their expectations for the upcoming holiday season. Q4 is typically a big one for Roku with advertisers eager to reach shoppers in any way possible. However, thanks to macroeconomic conditions it looks like this spending is not going to happen.

According to CEO Anthony Wood: “The first thing companies do in the face of such uncertainty is cancel their ad budgets. Big advertisers that we traditionally get spend from are not spending this quarter. They aren’t spending with anyone. It’s not just they’re not spending with us.”

Revenue from both devices and advertising is expected to fall in Q4. Management anticipates total revenue to be about $800 million or 8% less than it reported in the year-earlier period.

Roku’s stock is down almost 20% in pre-market trading.


The New York Times Delivers 📰

After a few quarters of tepid results, the New York Times was back with a bang in its third-quarter. The newspaper was able to surpass Wall Street’s expectations for profit and was in line for revenue. Adjusted profit was 21 cents a share compared to 13 cents anticipated while revenue was $548 million.

Most impressive, the Times was able to grow its advertising revenue by 5% after it fell the previous quarter and despite challenging conditions. It also signed up 180,000 new digital subscribers, maintaining its growth from the same period last year. The company now has a total of 9.3 million subscribers and is on schedule to meet its goal of 15 million by 2027.

According to Chief Executive Officer Meredith Kopit Levien, Q3 was the best on record for signing up customers to subscription bundles. More than 1 million customers now use more than one of the company’s products. Levien hopes to continue this trend by increasing the price of individual subscriptions to “drive more people to take our bundles.”

These results should please ValueAct Capital Management, the activist investor that disclosed a 7% stake of the Times in August. Value has been pushing the paper to increase prices and more aggressively sell bundles.

The New York Times’ stock is up more than 7% so far this week.

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