Immune to Tariffs, fueld by AI: Will Airbnb See a New Round of Growth After Its Q4 Earnings Report?

TradingKey - On Thursday, February 13, Airbnb (ABNB.US), released its Q4 2024 financial report. Not only did its revenue beat expectations, but Airbnb also demonstrated a strong trend of turning losses into profits, pushing its after - hours stock price up by 14%.

Key Financial Highlights

• Revenue: Airbnb’s revenue for Q4 surpassed expectations by 2.5%, growing 12% year-over-year to $2.48 billion, primarily driven by the growth of nights stayed on the platform.  
• Net Income & EPS: Airbnb reported net income of $461 million with a 19% net income margin, reversing the $349 million loss from the same quarter last year. This improvement highlights the company’s ability to drive profitability. Additionally, EPS came in at $0.73, beating the expected $0.58 by 26%.  
• EBITDA: Airbnb’s adjusted EBITDA for Q4 was $765 million, reflecting a 4% YoY increase. The company managed to improve profitability despite investments in expansion and new businesses, with an EBITDA margin of around 30%. This demonstrates Airbnb’s ability to maintain strong operational leverage, driving profitability through efficient cost control and revenue growth. 
• Free Cash Flow: Airbnb generated $458 million in free cash flow in Q4, with a total of $4.5 billion for the year. This shows the company’s ability to generate strong cash flow while maintaining business growth, highlighting operational efficiency. 
• Gross Booking Value: Gross booking value grew 13% year-over-year, reaching $17.6 billion, which also exceeded expectations of $17.2 billion. This growth signals continued strong activity on the platform, driven by both an increase in bookings and higher host earnings. 
• Nights and Experiences Booked: The company reported 111 million nights and experiences booked, a 12% increase from the previous year, surpassing the expected 108.7 million. This performance suggests robust global demand, with notable growth in first-time bookers and continued expansion in key regions like Asia Pacific and Latin America. 

Investment Outlook 

Airbnb will enter a new growth phase in 2025, focusing on global expansion, tech upgrades, and new business launches. The management’s Q1 revenue target: $2.23B-$2.27B, with 34.5%+ EBITDA margin. In May, $200M-$250M will be invested in new businesses to drive long-term growth. AI-powered improvements in search, payments, and customer service will boost efficiency and conversion. The Co-Host network will expand to Asia, increasing the supply of high-quality listings. Localized markets (e.g., Brazil, Japan) are projected to grow twice as fast as core markets, increasing market share. $3.3B stock buyback supports strong cash flow, while regulatory improvements and new ventures act as key growth catalysts. 

Investment Recommendation 

Airbnb is largely isolated from tariff impacts and stands to benefit from AI-driven enhancements, which should further boost profitability. However, its current valuation appears somewhat high, with a Forward PEG of 2.56. Based on analysts' average EPS forecast of $5.09 over the next three years and a reasonable valuation range of 30x-35x, a fair target price for ABNB is $178, with over 26% upside from now.