CNBC’s Jim Cramer on Tuesday told investors why he prefers Expedia to Airbnb, reviewing the two travel companies’ business prospects and recent earnings.
“At the end of the day, I think Expedia’s thriving because of its laser-focus on value, while Airbnb’s making a bunch of big bets that may or may not pay off in this environment,” he said. “I say stick with what’s working, I say stick with Expedia.”
Both Expedia and Airbnb managed to meet the estimates when they reported earnings earlier this month —but the former’s stock soared while the latter saw losses.
Airbnb’s outlook for the current quarter was mixed, Cramer said, which disappointed investors. The company’s guidance was more guarded, he continued, which made Wall Street fear that it’s bracing itself for a slowdown. Expedia, on the other hand, gave “unambiguously robust” guidance for the current quarter, Cramer said, as it raised its full-year forecast for gross bookings and revenue growth. He also suggested that expectations were greater for Airbnb because it has a higher price-to-earnings multiple than Expedia.
But beyond earnings, Cramer said there are other factors that make Expedia more attractive than Airbnb right now. Expedia’s online travel agency has a business-to-business division, while Airbnb is primarily focused on consumers, he pointed out. Cramer said he thinks the strength of Expedia’s B2B arm gave management the confidence to raise its full-year forecast. But Airbnb is “completely hostage to the consumer,” so management had to be more cautious, he added.
Cramer also argued that Expedia is engaged with its core business — flights, hotels and rental cars. Meanwhile, he said, Airbnb is exploring new opportunities beyond its primary home rental business, whose success is not assured. The company is working on a services division that targets wealthier consumers. Some of the newer offerings would allow guests to book a chef or personal trainer to come to their rental or add spa treatments to their stay. Airbnb is betting on pricier endeavors, Cramer said, even though it seems consumers are more value-conscious right now.
“They’ve gone upmarket, and it represents a risk,” Cramer said. “Expedia, on the other hand, is simply focused on execution, and that’s working as consumers keep coming to their platform to get the best prices when they want to travel.”
“It’s still early, but we’re seeing great momentum behind Airbnb Services and Airbnb Experiences, and we’re excited about the long-term growth potential,” a spokesperson for Airbnb told CNBC in an email. “Guest ratings since launch average 4.9 out of 5 stars – even higher than our stays business. Over 60,000 people have applied to be hosts, and about 10 percent of bookings for services so far are from locals or people nearby.”
Expedia did not immediately respond to request for comment.
