Airbnb Just Popped After a Blowout Quarter. Is the Stock Still a Buy?
Key Points
Airbnb's third-quarter revenue grew 19%, and earnings beat analysts' estimates by a wide margin.
Management raised its full-year outlook and now expects revenue growth in the high teens.
The board authorized a new $12 billion stock buyback, and management says AI is a tailwind for the business.
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Airbnb (NASDAQ:ABNB) shares jumped by 12% on Friday after the company reported third-quarter results that handily beat expectations. The stock is now just under its 52-week high and has gained 40% so far in 2026.
For the past few years, the general consensus among investors has been that Airbnb is a great business. It's just not growing at a rate that anyone would consider impressive. But the company's third-quarter results could change that perception.
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A blowout quarter with a lot to like
Airbnb's revenue grew 19% year-over-year, or 16% excluding any currency effects, which was significantly higher than analysts were expecting. On the bottom line, earnings per share were $3.16, compared to the $2.85 expectation among Wall Street analysts.
Demand was extremely strong as well. Nights and seats booked through the platform reached 155 million, up 16% from a year ago, and gross booking value grew 21% to $27.7 billion. Plus, the company remains an absolute cash machine. Airbnb has generated $4.9 billion in free cash flow over the past 12 months, and adjusted EBITDA increased by 22%.
The company is also starting to explore new growth areas and gain traction in some. Airbnb recently began adding adjacent services such as meal delivery and car rentals, and traditional hotels now account for a significant (but still single-digit) share of booked nights. These are all small pieces of Airbnb's revenue today, but they provide Airbnb with credible pathways to maintaining an elevated growth rate.
Looking ahead, management expects Airbnb's fourth-quarter revenue to fall in the range of $3.22-$3.28 billion, representing 17% growth at the midpoint.
Putting its cash to work
Airbnb has over $12 billion in cash on its balance sheet and, as mentioned, is generating free cash flow of roughly $5 billion annually. Well, the board authorized a new $12 billion share repurchase program, and that's on top of the $2.7 billion left under the existing authorization. Even after Friday's pop, the new buyback alone represents more than 10% of Airbnb's market value.
It's worth noting that Airbnb uses these buybacks (in part) to offset dilution from stock-based compensation, and the share count has shrunk and should continue to do so.
AI could be a tailwind
There have been lingering worries that AI agents could disrupt online travel stocks like Airbnb, potentially allowing people to book trips without ever visiting Airbnb's app. But management doesn't see it like this. As the shareholder letter said, "AI is the best thing to ever happen to Airbnb."
On one hand, it's management's job to calm investor fears of disruption. But there's some evidence to back up that claim. For one thing, Airbnb's AI customer service assistant now resolves 40% of issues without any human involvement, and the company's support costs per booking fell by about 17%. Airbnb is set to roll out an AI travel agent for guests in the first half of 2027. Meanwhile, nights booked through Airbnb's app rose 29% and now make up 66% of all booked nights.
The bottom line
To be sure, not every number from Airbnb's third-quarter earnings was perfect. For example, Airbnb's take rate, which is the share of booking value it keeps as revenue, slipped slightly in the third quarter, hurt by the new Reserve Now, Pay Later option. Because the program lets guests book earlier and pay closer to their stay, it helps booking volume (as we saw in the top-line growth) but delays revenue. And Airbnb isn't exactly a cheap stock, trading at about 34 times forward earnings after the post-earnings pop.
Having said all that, this was the quarter that Airbnb investors have been waiting for. Bookings and revenue growth accelerated, margins expanded, and management is confident enough to commit another $12 billion to buybacks. Although some future growth is priced in at these levels, Airbnb could still have plenty of upside and be worth a closer look for long-term investors.
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Matt Frankel, CFP® 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.
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