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Why Airbnb Stock Popped Today
Key Points
Airbnb's free cash flow is surging.
The company announced a $12 billion stock repurchase plan.
Shares of Airbnb (NASDAQ:ABNB) leaped more than 11% on Friday after the online lodging marketplace said its pace of expansion was quickening.
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More people are turning to Airbnb for their rental needs
Airbnb's revenue climbed 19% year over year to $4.9 billion in the third quarter.
Nights and seats booked on its platform rose 16% to 155 million, driving a 21% rise in gross booking value to $27.7 billion.
"It's rare for a marketplace of our size to reaccelerate growth, but that's exactly what we're doing," CEO Brian Chesky said. "In Q3, we delivered our fastest revenue growth in more than three years, with acceleration across our business, including our most established markets."
Chesky said Airbnb has redesigned its app to make it easier to find and book a home. "Our growth isn't being driven by any single product or feature," Chesky said. "It's the result of hundreds of improvements we've made across Airbnb over the last several years."
Notably, more people are making their first transaction on Airbnb's platform. First-time booker growth rose 13%. Younger, Gen Z customers were the company's fastest-growing cohort.
Airbnb is rewarding investors with larger cash returns
All told, Airbnb’s free cash flow soared 29% to $1.4 billion in the third quarter and 35% to $4.9 billion over the trailing 12 months.
This impressive cash generation enabled Airbnb to announce a $12 billion stock buyback program, as it moves to return more capital to shareholders
Healthy global travel demand trends also prompted Airbnb to lift its full-year revenue target. Management now projects a revenue growth rate in the "high teens" with further profit margin expansion.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb. The Motley Fool has a disclosure policy.