Hotel alternative Airbnb (ABNB) has slid about 22 percent over the past year, but the stock is up over 50 percent from its lows in 2022. One trader sees a further decline ahead for the company.
That’s based on the May 12 $115 puts. With 9 days until expiration, 5,369 contracts traded compared to a prior open interest of 112, for a 48-fold rise in volume on the trade. The buyer of the puts paid $2.89 to make the bearish bet.
Airbnb next reports earnings on May 9, so this is likely a bet that shares will take a hit then. The stock recently traded for about $122, so Airbnb would need to drop about 6 percent for the option to move in-the-money.
Despite some big moves lower in shares over the past year, revenue grew by 24 percent last year as travel trends improved. And earnings soared by 485 percent, as the company worked to increase profitability after it went public during the pandemic.
Action to take: Shares are likely to remain volatile for some time. And they’re certainly not cheap at 40 times earnings. But on a big enough drop, speculators could pick up shares for a rebound.
For traders, the puts could deliver triple-digit returns, especially if the company tanks after its earnings report for any reason. But if earnings go well, the option could lose all its value quickly.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.