Airbnb, Inc. (ABNB) Expected to Beat Earnings Estimates: Can the Stock Move Higher?

Airbnb, Inc. (ABNB) is gearing up for its earnings report, scheduled for February 13, 2025. Analysts predict that the company will experience a decline in earnings compared to last year, even as revenues are expected to rise. This expected earnings situation offers a snapshot into Airbnb's financial health, but how closely actual results align with these forecasts will be crucial in determining the stock's short-term movement.

Earnings Outlook

The current consensus estimates suggest that Airbnb will post quarterly earnings of $0.63 per share. This figure reflects a year-over-year decrease of 17.1%. On the revenue side, predictions indicate that Airbnb is on track to generate approximately $2.42 billion, marking a 9.2% increase from the same time last year.

Track Record of Estimates

In the past month, analysts have increased their EPS estimates for Airbnb by 3.54%. This adjustment indicates a shift in sentiment among financial analysts who cover the stock, signaling a more optimistic outlook regarding its earnings capabilities.

Understanding Earnings Whisper

The changes in analysts' estimates before earnings announcements can be insightful when evaluating business conditions for the reporting period. This analysis is at the core of the Zacks Earnings ESP (Expected Surprise Prediction). The Earnings ESP measures the most up-to-date earnings estimate against the Zacks Consensus Estimate. Because analysts update their projections as new information emerges, a more recent estimate can offer deeper insights into a company’s likely performance.

A positive Earnings ESP reading generally indicates a strong possibility of outperforming the consensus. Historical data shows that stocks holding a positive Earnings ESP combined with a solid Zacks Rank (either #1 for a Strong Buy, #2 for Buy, or #3 for Hold) tend to deliver positive surprises almost 70% of the time.

It’s essential to note that a negative Earnings ESP does not guarantee an earnings miss. The model indicates that predicting an earnings beat is particularly challenging for stocks with negative Earnings ESP readings or a Zacks Rank of #4 (Sell) or #5 (Strong Sell).

Airbnb's Current Position

For Airbnb, the Most Accurate Estimate points to a better earnings profile compared to the Zacks consensus estimate. The current Earnings ESP stands at a substantial +25.59%. Combined with a Zacks Rank of #3, this points toward a strong likelihood of Airbnb outperforming expectations.

Performance History

To further analyze the potential for an earnings surprise, it's beneficial to look at Airbnb's historical performance relative to its estimates. In the most recent quarter, expectations were for earnings of $2.17 per share, but the actual figure came in slightly lower at $2.13, resulting in a -1.84% surprise. Over the past year, Airbnb has surpassed consensus estimates two out of four times.

Conclusion

Ultimately, whether Airbnb’s stock will move higher or lower following the earnings release will depend not only on the results but also on broader market factors and investor sentiments. Stocks can often decline despite an earnings beat due to other disappointing aspects, and vice versa. Nevertheless, focusing on stocks anticipated to surpass earnings expectations generally enhances the likelihood of favorable results. As the earnings announcement approaches, it's wise for investors to review indicators like Earnings ESP and Zacks Rank to make informed decisions.

With the current outlook, Airbnb is presenting itself as a strong candidate for an earnings surprise, but investors should also consider various other factors before making any investment decisions leading up to the earnings call.

Airbnb, Earnings, Stock