Free Money for AirBNB (NASDAQ: ABNB)

Brit Ryle

Posted February 16, 2024

I recently reserved a house for a week in January 2025 on one of Honduras’ barrier islands through AirBNB (NASDAQ: ABNB). The Mezo-American reef system starts in Honduras, and I haven’t floated in warm Caribbean water looking at cool fish through my snorkel mask since the pandemic. 

My two kids, stepdaughter and whatever significant others are in play next year will fly into Roatan and then take the hour-long ferry to Utila, Honduras. 

We’ll be staying on the tip of that spit of land that curls around Utila harbor. Apparently you don’t have book guides and boats – the reef system is right off the beach…easily accessible from the house…

You can see a little white water in this picture from the house, where the waves break over the coral. 

Anyway, this article isn’t meant to be a travelog. It’s about what my $1,500 means for AirBNB’s business. 

Free Money for AirBNB 

AirBNB (NASDAQ: ABNB) reported earnings a couple days ago, on February 14. For the 4th quarter of 2023, AirBNB took in $2.2 billion in revenue, a huge 70% improvement over Q4 2022. On its conference, CEO Brian Chesky said that were it not for some nonrecurring tax related expenses, the company’s reported $249 million net loss would have been a profit of $489 million. 

Investors were disappointed, sending down as much as 5% on Wednesday. 

Buyers quickly stepped in as shares of AirBNB hit their 50-day moving average around $142 a share. Yesterday, the stock closed at $157 –  a solid 10% gain from Wednesday’s lows.

Yeah, inventors weren’t nearly as disappointed as it seemed. And the reason for the bullish turnaround has a lot to do with my $1500 bucks…

Throughout 2023, AirBNB held an average of $7.2 billion of customer deposits. The company invests that money in various securities. And last year, those customer deposit investments paid off to the tune of $638 million in net interest income. And that $638 million in net interest income accounted for roughly 30% of AirBNB’s total pre-tax income for 2023. 

Now this practice isn’t unusual or unseemly. Insurance companies invest the money they take in from premiums on policies. Banks invest customer deposits. Really, any company that holds a lot of cash also invests it and declares interest income on those investments. 

No doubt Treasury bonds make up a good portion of the securities that AirBNB invests in. If the Fed does end up cutting rates this year, a rally for bond prices could be pretty profitable for AirBNB.

You don’t hear much about AirBNB being an interest income powerhouse. But the 9% it made on its customer deposit is pretty darn good. And I won’t begrudge AirBNB the $135 bucks it’ll make off my $1,500 deposit for a week of snorkeling with my kids on Utila.

That’s it for me this week, take care, have a great weekend and I’ll talk to you Monday…

Briton Ryle
Chief Investment Strategist
Pro Trader Today