Strong quarterly results for Airbnb, PayPal and Starbucks

Financial3 Aug ’22 09:51Author: BNR Web Editor

Airbnb is more popular than ever this summer, PayPal is benefiting from a multi-billion dollar investment from activist investor Elliott Management, and Starbucks is happy with inflation allowing them to increase the price of their cups of coffee.

Airbnb

“It’s actually the best quarter ever for Airbnb,” says Wim Zwanenburg, analyst at Stroeve Lemberger. “The company has also been quite profitable in the past quarter.” Airbnb went public in December 2020. ‘Since then, the share price has risen quite a bit, by around 70 percent since the IPO.’ According to Zwanenburg, Aribnb’s forecasts were viewed with some trepidation. “Although the current quarter numbers were very good, the forecast was still a bit tepid, disappointing investors overall.” A sharp increase in bookings is expected in the third quarter, he says. “Many corona measures have fallen away internationally.”

However, Zwanenburg sees all kinds of headwinds for the company. ‘For example currency. They are American companies, so what they book in the rest of the world is retroactively worth less because of the rise in the dollar. In addition, of course, there are the obstacles to international air traffic, the logistical problems due to staff shortages.’ Domestic bookings are doing ‘well’, says Zwanenburg. ‘It is in good condition. But after the fair, the figures were not so well received, and Airbnb had to lose almost 10 percent.’

paypal

Then the quarterly figures for PayPal. Elliott Investment Management has invested more than $2 billion in the company. ‘Fintech companies have been under considerable pressure.’ These are the companies that combine financial services and products with innovative technology. “It is seen as a vote of confidence that Elliott is making this investment. The company is showing good numbers.’ These numbers were also eagerly awaited, according to Zwanenburg. “These are companies struggling with the fall in cryptocurrencies. During the corona pandemic, fintech companies were of course the stars of the stock exchange. They benefited from digital payments and the popularity of e-commerce.’

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Zwanenburg cites several reasons for PayPal’s good numbers. In this way, it benefits from the increasingly facilitated payment transactions in physical stores. In addition, there are also all possible measures to save costs. ‘Pass the stream, it’s going well. They have also announced a decent share buyback and the number of transactions with retailers and consumers is really increasing. The company has more than 40 million users. Previously, the company suffered from inactive accounts. People who kept a digital wallet but did nothing with it. PayPal managed to activate that file quite nicely.’ Finally, there is the effect of the loss of revenue from the eBay platform, where they lost their position to another fintech player. ‘It is declining, so on balance PayPal is in a better position. It is also a share that has been under pressure with a price loss of 50 per cent. But yesterday PayPal’s share price rose by more than 10 percent.’

Starbucks

And finally the figures from Starbucks. “Like with Airbnb, Starbucks is also looking at the currency headwind,” says Zwanenburg. “The figures were better than expected. The company succeeds in passing on much increased purchase costs of coffee beans and other raw materials to the customer.’ He said the numbers were in line with expectations. ‘The share price reaction was not as exuberant as the other two companies. Overall, the price rose slightly and investors were reassured by the numbers from Starbucks.’

Outlook

Zwanenburg explains that price targets and earnings estimates have generally been under some pressure in recent months, but looking at the sum of all forecasts, the numbers are not that bad. The reported company figures are also better than feared. ‘Within the tech companies – if you look at the five largest companies – only the figures from Meta were disappointing. Digitization is clearly continuing. And that trend is also quite resistant to a recession.’

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The comparison of last year’s quarterly figures in the US is somewhat less favorable than the same comparison in Europe, because there were not particularly strict corona measures in the US last summer, and there still were in Europe. “The European figures are much better than expected. This is why the forecasts and profit estimates – especially for European companies – are being revised higher.’ Zwanenburg sees that the current quarterly figures have provided an impetus. ‘We saw this reflected globally in rising stock markets in the US. Concerns about a recession are therefore more in the background now.’

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