When a company trades on a pricey valuation the market expects a lot. Even though Airbnb (US:ABNB) produced another stellar set of results, for the first quarter, its share price dropped 10 per cent in after-hours trading when it revealed year-on-year revenue growth would slow in the current period.
In the first quarter, revenue was up 20 per cent year on year and was 1.5 per cent ahead of analyst expectations. The company has benefitted from the pandemic and the widespread adoption of homeworking. Revenue is more than double pre-pandemic levels.
The company also generates a large amount of cash. Free cash flow for the quarter was $1.6bn, up 32 per cent year-on-year. In the last 12 months its free cash flow was $3.8bn giving it a free cash flow margin of 44 per cent.
Despite all this good news, the share price dropped because of the gloomier outlook for the second quarter. Management expects revenue to be between $2.35bn and $2.45bn which represents year-on-year growth of between 12 per cent 16 per cent. This wasn’t way behind analyst expectations of $4.42bn. But when you are trading at a forward price to earning ratio of 33, the market expects perfection. AS
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Asos’ first half underwhelms
Asos (ASC) shares plummeted 13 per cent after the fast fashion-retailer revealed a weak set of interim results for the six months to 28 February. Revenues fell by 8 per cent to £1.84bn, with a 10 per cent contraction in the UK, the company’s key market.
Management said its ‘driving change’ agenda contributed to around half of the sales fall, but that the strategy is “driving improving order economics”. Pre-tax losses widened to £291mn, from a negative £16mn last year. The company said that free cash outflow for the full year will be around £100mn, at the top end of its guidance. CA
Rebrand for National Express
National Express (NEX) will change its name to Mobico next month, to “better reflect the group’s international nature and its diverse range of mobility services”. Subsidiaries will retain their own brands, however, meaning the company’s UK coach network will still be known by its familiar title. When the name change becomes effective, the group’s stock ticker will change to MCG. JS
Read more: National Express revenues soar on higher passenger numbers
Vertu delivers solid results
Vertu Motors (VTU) shares rose by 4 per cent in early trading as investors enjoyed the automotive retailer’s record annual revenues of £4bn, boosted by higher vehicle prices and the impact of acquisitions, and a 27 per cent hike in the dividend.
For the year to 28 February, Vertu’s adjusted profit before tax came in at £39.3mn, ahead of market expectations. The company also confirmed it would buy back a further £3mn-worth of shares. CA
