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Airbnb (ABNB) lost 80 percent of its business in eight weeks as business collapsed when the coronavirus pandemic hit.
CEO and co-founder Brian Chesky doesn’t expect a repeat even in an extended recession.
Speaking to Yahoo Finance Live, Chesky said the mortgage company is well-positioned to ride out any downturn because its platform is “incredibly adaptable.”
“We have a niche in almost every type of society — all over the world, and we can adapt whenever habits change,” he said. “Airbnb is a very affordable alternative to hotels for a lot of people. I think that’s why a lot of people are going to Airbnb in this economic environment,” he said.
Shares of Airbnb extended their slide on Tuesday, with shares down more than 1% despite swinging to a profit in the second quarter. Revenue grew 58 percent year-on-year as solid travel demand continued to drive bookings on the platform. Booked nights and experiences remained strong, at 103.7 million, representing 25% year-over-year growth.
“The reason we’ve had record revenue, record profits is because of our discipline,” Chesky said. “We didn’t have to adjust our recruitment plan. We have remained incredibly disciplined. We will continue to do so.
“In development mode”.
The latest quarterly results mark a further turnaround for the company, which has seen a dramatic turnaround in operations since the coronavirus pandemic imposed lockdowns and halted international travel.
Even as the pandemic nearly halted Airbnb’s 2020 initial public offering, the company quickly tightened its budget and cut 25% of its workforce. The company has made significant gains in the expansion of remote work, with long-term rentals accounting for the fastest growing segment. Summer travel growth has increased the benefit, with guest demand at an all-time high, according to the company.
Free cash flow for the quarter was $795 million, down from the first quarter, but the company grew its cash balance to $10 billion.
Still, a $2 billion share buyback failed to lift shares on Tuesday, indicating strong interest in the company at the end of the year, reflecting concerns among investors about the recession and its impact on the travel sector.
Airbnb is now on track to post its highest quarterly revenue in Q3, between $2.78 billion and $2.88 billion.
“We’re in a growth mode,” CFO Dave Stephenson said on the earnings call. “We are not in a profit maximization mode.
Inflation as a potential tailwind
With nearly $800 million in free cash flow generated during the quarter, the company plans to deploy $10 billion of its current balance sheet. Basics.”
While Airbnb is currently exploring new “offers,” Chesky said the most immediate focus will be on signing up new hosts and expanding protections for guests and hosts.
Fears of recession and high inflation may be the tail end for the platform.
The company, which was founded during the global financial crisis, is now returning to its former self, and users have turned to the platform to earn extra income to cover the rising cost of living.
Active listings in the second quarter grew 23 percent compared to the same period in 2019.
“It’s going to be a very important thing,” Chesky said, “and it’s one of the easiest ways to make passive income with your current property.” I think that’s what a lot of people are looking for in our current economic climate.
Watch the full interview in the video above.
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter. @AkikoFujita
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