After Airbnb reported earnings on Tuesday, its stock tumbled nearly 15% due to mixed
results for its second quarter and lackluster guidance for the third quarter. For the
second quarter, Airbnb slightly beat revenue expectations of $2.74 billion with $2.75
billion. However, the company reported earnings per share (EPS) of 86 cents, falling
short of the estimated 91 cents.
Regarding third-quarter guidance, the company projects revenues of $3.7 billion, below
analyst estimates of $3.84 billion. On the company's earnings call, CEO Brian Chesky
addressed the lower outlook, saying, "We are seeing shorter booking lead times globally
and some signs of slowing demand from U.S. guests, and our Q3 outlook incorporates
these recent trends."
Airbnb and other travel companies benefited from the bounce-back in travel after
COVID-19 limited most travel from 2020-2021. However, it appears the pent-up demand
for travel has been waning. In the second quarter, the value of all Airbnb’s bookings
grew 11%, continuing a trend of slowing booking growth. Airbnb posted 12% booking
growth in Q1 of this year, 15% growth in Q4 2023, and 17% in Q3 2023.
Airbnb’s outlook, paired with last Friday's weaker-than-expected U.S. jobs report,
spooked some investors, raising concerns about the weakening of the U.S. consumer
and overall economy. In the event of an economic downturn, Airbnb and other travel
companies could take a significant hit as consumers cut back on spending. However,
Chesky expressed optimism on the call, pointing to the $6 billion in share buybacks in
February, the addition of new revenue streams such as Airbnb Icon and Experiences,
and the future adoption of generative AI to provide a travel concierge experience.
Airbnb is down nearly 19% year-to-date and has an average price target of $152.79,
implying an upside potential of around 37% based on current prices of $112 per share.
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