Airbnb stock tanked Wednesday as investors digested mixed second-quarter results, with earnings coming in light. The company also warned that it is seeing slowing demand in the U.S.
Airbnb said late Tuesday it earned 86 cents per share on sales of $2.75 billion for its June-ended quarter. On average, analysts projected the San Francisco-based company would post earnings of 91 cents per share on sales of $2.7 billion, according to FactSet. For the same period a year earlier, Airbnb earned 98 cents per share on sales of $2.5 billion.
For the current quarter, Airbnb guided for sales of $3.7 billion at the midpoint of its range. Prior to the company posting its results, analysts forecast Airbnb would tally $3.84 billion in sales for the September-ending quarter, according to FactSet.
"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," Chief Executive Brian Chesky told analysts late Tuesday. That's despite excitement from the Olympics and strong growth in the Latin America and Asia Pacific regions, Chesky said.
On the stock market today, Airbnb stock is down 14.5% at 111.57 in recent action. The decline would mark Airbnb's largest single day drop in its trading history, according to Dow Jones Market Data. The company went public in December 2020.
Airbnb Growth Slowing As Revenge Travel Fades
The second quarter continued a trend of decelerating bookings growth for Airbnb. The total value of all bookings through Airbnb grew 11% year over year to $21.2 billion for the three month period. That's down from 12% booking growth in Q1, 15% growth in the final quarter of 2023 and 17% growth in September-ended third quarter of 2023.
While sounding the warning about U.S. spending, Airbnb said in its investor letter that it expects Q3 to show "a sequential moderation in the year-over-year growth of Nights and Experiences Booked relative to Q2."
Airbnb's outlook comes just days after a weaker-than-expected U.S. jobs report stoked investor concerns about an economic slowdown and roiled the markets. Airbnb's commentary will "likely only further stoke the soft consumer thesis adopted by many market participants at this point," RBC analyst Brad Erickson said in a client note late Tuesday.
In 2022 and 2023, Airbnb, Booking Holdings and Expedia Group benefited from a bounce-back in travel after Covid-19 prevented many types of travel in 2020 and into 2021. So-called revenge travel powered strong sales growth for the companies. But the picture appears to be shifting.
Last week, Booking reported slower-than-expected growth in room nights booked. The company said it was seeing softness in European travel. Expedia will report results Thursday.
BofA Securities analyst Justin Post said in a client note Tuesday that a "fading reopening benefit" warrants caution for Airbnb stock. He reiterated a neutral outlook.
"Tough comparisons, along with slowing long-term stays growth, is impacting bookings growth," Post wrote Wednesday. "Airbnb also noted that shortening bookings windows are impacting its 3Q outlook, leaving open a possibility of improving trends if U.S. consumers end up booking late and maintaining relatively stable trip growth September."
Airbnb Stock: Struggling In 2024
With Wednesday's slide, Airbnb shares are down 18% year to date and off 20% from 12 months ago. Airbnb got off to a strong start in 2024, gaining 20% in the first three months. But the stock has struggled since its first quarter earnings report, which included a weaker-than-expected sales forecast.
Trading near 111 Wednesday afternoon, the stock is at its lowest levels since June 2023.
Coming into the report, Airbnb stock had an IBD Composite Rating of 53 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Airbnb's IBD Relative Strength Rating was 22 out of 99. The RS Rating means that Airbnb has outperformed only 21% of all stocks in IBD's database over the past year.
