Airbnb Just Hit a Four-Year High. Is It a Buy?

After years of trading sideways to the chagrin of early investors, Airbnb (NASDAQ: ABNB) finally appears to be breaking out.

Shares of the leading home-sharing platform finished Friday up 17.4%, closing at its highest point in more than four years. Coming into the report, the stock had been climbing in line with strong results from peers in the travel sector and on hopes for the second-quarter results. Additionally, Airbnb appears to be seeing results from its investments in AI.

Let's take a look at the report before discussing whether the stock can keep moving higher.

Image source: Airbnb.

Airbnb accelerates

Airbnb's second-quarter earnings report showed that the company continues to bounce back from a dip in 2024 and 2025.

The travel company reported 17% revenue growth, or 13% on a currency-neutral basis, to $3.61 billion, which topped estimates at $3.58 billion.

Nights and seats booked, Airbnb's core growth driver, were up 10% to 148.3 million, and gross booking value rose 16% to $27.2 billion, showing it benefited from rising prices.

On the bottom line, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 21% to $1.3 billion, representing an expansion in adjusted EBITDA margin to 35%.

On the bottom line, generally accepted accounting principles (GAAP) earnings per share rose from $1.03 to $1.37, benefiting from revenue growth, margin expansions, and share buybacks. That figure beat the consensus at $1.22.

Finally, investors were pleased with a guidance increase, as the company now expects mid-teens revenue growth for the full year and an adjusted EBITDA margin of at least 35.5%. For the third quarter, it sees revenue growth of 15%-17%, or 12%-14% adjusting for foreign exchange, to $4.69 billion-$4.77 billion, which was ahead of expectations at $4.61 billion.

What's working for Airbnb

In addition to benefiting from strong travel demand, Airbnb has also improved its product on multiple fronts.

The company has been investing in AI for years, and its AI assistant continues to improve as it now resolves nearly 45% of issues without human intervention and delivers faster resolution times. The company plans to introduce an AI voice assistant later this year that will help with phone calls.

Airbnb is expanding its selection by partnering with boutique and independent hotels, allowing it to more deeply penetrate the travel industry and bring in new customers who don't typically book homeshares. It's also added new services, including car rentals, airport pickups, luggage storage, and grocery delivery.

Together, those moves show the company becoming an all-in-one travel platform rather than just a home-sharing platform, which is a better way to serve guests' needs. The more Airbnb can do to keep customers on its platform without having to visit a competitor to book a flight or rent a car, the better it will do in the long run.

Airbnb has also made improvements for hosts, including simplifying pricing and giving them personalized recommendations and tips to improve listings.

Finally, the company benefited from the World Cup in the quarter, which led to more than 150,000 homes across host cities being listed for the first time, and it said it's developing a repeatable playbook for major global events.

Is Airbnb a buy?

Airbnb has long been plagued by good-but-not-good-enough earnings. The company has delivered steady growth on the top and bottom lines, and clearly benefits from competitive advantages. However, a combination of valuation concerns, regulatory pushback, and a laundry list of customer complaints seemed to have restrained the stock.

With Friday's 17% gain, that may be changing. CEO Brian Chesky's effort to expand beyond the core seems to be paying off, and issues like the war in Iran have not slowed the company down.

Airbnb is executing as effectively as it has in a long time, and the valuation continues to look reasonable, especially on a free cash flow basis.

The company finally seems to be tapping into the potential of its platform. Given that and the momentum in the business, buying a few shares of the stock makes sense.

Jeremy Bowman has positions in Airbnb. The Motley Fool has positions in and recommends Airbnb. The Motley Fool has a disclosure policy.