What Airbnb’s earnings reveal about the future of travel

Indeed, Wall Street has been punishing Airbnb over the past few days even after the online rental company reported jaw-dropping results, including a 300% year-over-year increase of sales to $1.34 billion. During a call with analysts, CEO Brian Chesky doubled down on the company’s sales growth, projecting that the company’s next quarter will be “our strongest revenue quarter ever,” which “speaks to the inherent resiliency of our business.”

Investors, however, were spooked by what Airbnb revealed in a letter to shareholders, in which the company said that the “COVID-19 pandemic creates ongoing uncertainty for our future results.” In other words, while people may be traveling into the next quarter, any future vacation or work-travel plans may be put on hold as the Delta variant spreads.

Airbnb shares sunk roughly 4% on Thursday after it disclosed the grim news, and its shares were still slumping on Monday, ending the day down 2.7% to $148.57.

Analysts at Bloomberg Intelligence, however, believe Airbnb is being “conservative” with its growth projections, and is “well-positioned to benefit from strong pent-up demand for cross border travel, we believe, another driver for its 30-40% bookings and room-night growth through 2022.” As long as the Delta variant doesn’t create too much chaos in the travel industry, Airbnb appears poised to benefit.

Meanwhile, Airbnb rival Booking Holdings is also “closely monitoring the impact of the Delta variant” on its business, the company’s CEO Glenn Fogel said during a recent call with analysts as part of its quarterly earnings report. Like Airbnb, Bookings said the Delta variant is creating “volatility and uncertainty” around the travel industry, which has concerned investors. Booking Holding shares were down 3.6% to $2,124.72 on Monday.

Barclays analysts seemed optimistic about Booking Holdings in a recent analyst note, saying “there were few negatives to point out this quarter.” The company brought in $2.16 billion in its latest quarter, beating analyst projections. 

“Bookings for Europe and the US for the rest of the summer is higher than it was in 2019, leading to a much stronger recovery in revenue expected in 3Q,” the Barclays analysts wrote. 

The big question for Airbnb and Booking Holdings is how the two companies can keep up their sales growth in case of the worst-case scenario that the Delta variant continues to worsen. As Marketwatch noted on Monday, airline stocks have also been falling amid fears of COVID-19 cases rising.

The travel industry should prepare for an increasingly bumpy ride.

Jonathan Vanian 
@JonathanVanian
jonathan.vanian@fortune.com

NEWSWORTHY

Apple just lost a big patent case. Apple must pay $300 million in royalties after a U.S. jury found that the iPhone maker allegedly infringed on the technology patents of Optis Wireless Technology, according to a report by Reuters. The decision was part of a retrial involving patents that stemmed from companies including LG, Panasonic, and Samsung; Optis eventually obtained those patents, which were allegedly used in Apple products like iPhones, Watches, and iPads. In response to the jury’s decision, Apple said in a statement, per The Verge, that it would “continue to defend against [Optis's] attempts to extract unreasonable payments for patents they acquire.” Said a spokesperson for Apple: “Optis makes no products and its sole business is to sue companies using patents they accumulate.” 

Cisco to spend millions on monitoring. Cisco plans to acquire the Israeli enterprise startup Epsagon in a deal worth $500 million, according to unnamed sources cited in a report by Israeli business daily "Globes.” Epsagon, which has raised $30 million in funding, specializes in software that helps companies monitor their IT and app operations that run on cloud computing services like Amazon Web Services. In a blog post, a Cisco executive explained that the acquisition is part of the networking giant’s plans to offer multiple app-monitoring services, as exemplified via “AppDynamics, ThousandEyes, and Intersight.”

Consolidation hits the online food delivery market. GS Retail Co., a Korean convenient store operator, and a consortium that includes Affinity Equity Partners and British investment firm Permira, plans to buy South Korean food-delivery app company Yogiyo, The Korea Herald reported. Yogiyo is currently owned by German food-delivery service Delivery Hero. From the report: South Korea's antitrust watchdog has required Delivery Hero to sell Yogyio by early next year after it bought a controlling stake in Woowa Brothers, the operator of the country's top delivery app Baedal Minjok, or Baemin, two years ago.

Twitter’s redesign gets some criticism. Twitter’s redesigned app, which included a new font, got some negative feedback from some design experts who said the changes were not as “accessible” as they could have been, reported TechCrunch. From the report: “When the update hit, I could immediately feel pain in my eyes, and within about half an hour, I was having a tension headache,” said Alex Haagaard, a design researcher and founding member at The Disabled List. “I have a lot of chronic pain, and I cannot deliberately expose myself to something that is going to be exacerbating my levels of pain, because then that has cascade effects.”

FOOD FOR THOUGHT

Digging into Apple’s controversial privacy move. In an interview with journalist Julia Angwin, the editor-in-chief of tech investigative news outlet The Markup, former Facebook security officer Alex Stamos gave his thoughts on Apple’s recent decision to scan photos on people’s iPhones for child sexual abuse imagery. Privacy experts voiced concerns about Apple’s decision, which Apple senior vice president of software engineering Craig Federighi recently defended, but conceded that he wished it “would’ve come out a little more clearly for everyone.”

Stamos explained Apple’s move follows some of the work “big cloud companies” have been doing for years. He said that when “you send photos via Facebook, or if you create a Google Drive folder and then share it with somebody else, then they will scan those images to see whether they’re child exploitation.”

From the interview: Angwin: The advocates are calling it a backdoor. Others have said it’s hypocritical because, in the San Bernardino case, they refused to comply with a court order to bypass the phone’s four-digit login. They said at that time that this order would be like creating a master key to open all iPhones. Is this a backdoor? 

Stamos: I would not call this a backdoor, but I do believe that the way Apple has rolled out device-side scanning has created the possibility of a new type of surveillance becoming popular globally. Most of my concerns are actually outside the United States. If you look at the existing child safety framework in the U.S., the jurisprudence has actually been going against it. 

But elsewhere in the world, there are already bills requiring preemptive scanning for illegality, so this might be part of the EU Digital Services Act, the U.K. Online Harms bill, and a variety of bills in India, for example. 

So while I wouldn’t call this itself a backdoor, my biggest concern is that Apple has effectively opened the door to a type of searching on devices. 

IN CASE YOU MISSED IT

Airbnb changes policy that forced claims of sexual assault from guests or hosts into arbitration by Jessica Mathews

Crypto platform offers $500,000 “bug bounty” to hacker for returning stolen assets by Marco Quiroz-Gutierrez

Inside the FEMA program that spent $1 billion on COVID-19 funerals by Kat Eschner

Basketball star Baron Davis talks investment in CBD-focused House of Wise by Stephanie Cain

How harsh are China’s COVID restrictions? A single infection closed the world’s third-busiest port by Eamon Barrett

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BEFORE YOU GO

The tech that powered hip hop. The Smithsonian has a fun and interesting online package about the history of hip hop through the prism of various cultural artifacts maintained by the National Museum of American History. A few of those pieces include important technology crucial to the development of the musical art form, like the original Technics Turntable used by the pioneering DJ Grandmaster Flash. That particular turntable was originally intended for consumers interested in high-quality audio, but became associated with several DJs like Grandmaster Flash during hip-hop’s rise in the early 1980’s.

The boombox was another important consumer tech device to hip-hop culture. The museum’s boombox, a Sharp Electronics model HK-9000 from 1985, was originally used by Fab 5 Freddy, who “was the first host of the groundbreaking hip hop music video show, "Yo! MTV Raps," in the late 1980s.”