Because of the nature of its business model and regional diversification, Airbnb Inc.’s (NASDAQ: ABNB) short-term rental platform might be prepared for a recession.
If the economy falls into a slump, customers can save money on travel and hence on rent. However, Airbnb’s business model protects the company from increasing expenditure during economic downturns.
The firm, for an instance, does not own real estate and instead just allows owners and clients to negotiate. This results in considerable savings in both upfront and ongoing expenditures. Even if economic uncertainty leads landlords to lower rental rates, Airbnb Inc. (ABNB) will still collect a portion of each transaction. The company’s sales will decline, but it will not lose its lead.
ABNB is a market leader, and many property owners are seeking ways to advertise their offers on the site, which lowers marketing expenses. Furthermore, the cost and effort required to publish a new ad or serve a new traveler on Airbnb are low.
As a consequence of a favorable cost structure and scalable business, Airbnb Inc. (ABNB) generated $795 million in free cash flow in the second quarter, representing a 38% free cash flow margin.
Geographic diversification contributes to the business’s stability. As a consequence, the recession in certain places may have little impact on the company’s operations in other parts of the world. Furthermore, clients book accommodations on Airbnb not just for vacations but also for business travels.
At the present, Airbnb Inc. (ABNB) estimates that income will increase by 24-29% year on year in the third quarter (by 69-75% compared to 2019). Furthermore, as of June 30, the corporation had around $10 billion in cash and marketable securities.
ABNB stock fell -1.69% in the previous week and increased 3.66% in the previous month. During the previous quarter, this company’s stock fell -1.29%. The stock has down -27.26% in the previous six months, with a full-year loss of -26.13%. This stock’s year-to-date (YTD) price performance is presently -32.24% at the time of writing.