2 WallStreetBets Stocks That Beat Earnings Expectations

The Reddit forum WallStreetBets garnered worldwide attention last year thanks to its short squeeze attempts on heavily shorted stocks GameStop Corp. (GME) and AMC Entertainment Holdings, Inc. (AMC). But in addition to targeting fundamentally poor stocks with a high level of short interest, the community also discusses and bets on companies with sound fundamentals and growth attributes.

Fundamentally strong companies Airbnb, Inc. (ABNB) in San Francisco, and Upstart Holdings, Inc. (UPST) in San Mateo, Calif., are being discussed on the forum after they beat their earnings estimates. ABNB’s earnings per share came in at 8 cents, beating the 3 cents estimated by the Refinitiv survey of analysts. It also topped the $1.46 billion revenue estimate, posting a $1.53 billion estimate. The earnings surprise came on the back of robust travel demand. UPST beat the FactSet revenue consensus of $262.90 million for the fourth quarter, ended Dec. 31, 2022, after reporting $304.84 million in revenue.

Both companies expect even better performance in the coming quarter, with ABNB estimating its revenue will be between $1.41 billion and $1.48 billion. Analysts expect its revenues to amount to $1.24 billion in the current quarter. UPST expects its revenue to come in between $295 million and $305 million. This compares with a $258.30 million consensus EPS estimate for the current quarter.

Airbnb, Inc. (ABNB)

ABNB is a global platform for stays and experiences. The company’s marketplace model connects hosts and guests online or through mobile devices to book spaces and experiences worldwide. Its listings include homes, cabins, treehouses, boats, castles, and luxury villas. It has received three mentions in the WSBs over the past 24 hours.

ABNB’s revenue increased 78.35 year-over-year to $1.53 billion for the fourth quarter, ended Dec. 31, 2021. The company’s adjusted EBITDA came in at $333 million, compared to an adjusted EBITDA loss of $21 million in the year-ago period. Also, its net income was $55 million, compared to a $3.90 billion net loss in the year-ago period.

Analysts expect ABNB’s EPS for its fiscal 2022 to increase 338.6% year-over-year to $1.36. Its revenue for the quarter ending March 31, 2022, is expected to increase 64% year-over-year to $1.45 billion. It surpassed the Street’s EPS estimates in three of the trailing four quarters. And over the past nine months, the stock has gained 11.3% in price to close the last trading session at $150.04.

Upstart Holdings, Inc. (UPST)

UPST is a leading artificial intelligence (AI) lending platform that helps access affordable credit while reducing its bank partners' risk and cost of lending. Its platform utilizes advanced machine learning tools to accurately gauge the risk and approve more applicants than traditional, credit-score-based lending models. It has received 14 mentions in the WSBs over the past 24 hours.

On Feb. 15, 2022, UPST’s board of directors approved a share repurchase program with authorization to purchase up to $400 million of common stock. UPST CFO Sanjay Datta said, “With the volatility in the trading of our stock, we have seen what we believe to be attractive buying conditions at various times over the past year, and our profitability puts us in a position to be able to initiate this program and take advantage of those situations on behalf of our shareholders.”

For its fiscal fourth quarter, ended Dec. 31, 2021, UPST’s total revenue increased 252% year-over-year to $304.84 million. The company’s adjusted net income increased 1,499% year-over-year to $86.95 million. Also, its adjusted EBITDA came in at $91 million, representing a 487% increase year-over-year.

For the quarter ending March 31, 2022, UPST’s EPS and revenue are expected to increase 145.5% and 161.5%, respectively year-over-year to $0.54 and $303.49 million. It surpassed consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 53.9% in price to close the last session at $112.43.

ABNB shares were trading at $151.68 per share on Thursday morning, up $1.64 (+1.09%). Year-to-date, ABNB has declined -8.90%, versus a -12.09% rise in the benchmark S&P 500 index during the same period.

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.

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