Market Reacts to Airbnb’s Q2 Forecast Amidst Profit Beat
Investors in Airbnb experienced a turbulent week as the company’s shares fell sharply by over 6% after the release of its second-quarter forecast, which did not align with the high expectations set by Wall Street. Despite reporting a robust profit for the previous quarter, concerns about the company’s growth trajectory have surfaced, leading to a significant drop in its stock value.
The timing of the Easter holiday and the effects of currency exchange were cited as reasons for Airbnb’s projection of revenue that didn’t meet analysts’ ambitious projections. Additionally, the company anticipates that the number of room nights booked will remain relatively unchanged sequentially, although it expects a slight increase in the average daily rate year-over-year.
Market sentiment has been affected by signs of moderating leisure travel demand within the United States, a key market for Airbnb. Analysts at Jefferies expressed disappointment over the company’s performance in room nights booked, which they considered crucial to alleviate concerns about slowing growth and potential risks to consensus estimates for more rapid growth in the latter half of 2024 and into 2025.
BTIG analysts pointed out that Airbnb’s forecast suggested bookings of approximately 125 to 127 million nights for the second quarter, falling short of the consensus estimates of 129.2 million nights based on LSEG data. Jake Fuller from BTIG remarked that while Airbnb exceeded its first-quarter guide, it did not meet the more aggressive expectations for the quarter and its outlook for the second quarter.
Despite the market’s reaction, some analysts believe that the decline in share price is an overreaction to the weaker guidance provided for the second quarter. Morningstar analyst Dan Wasiolek maintained that the outlook for 2024 remains largely unchanged and suggests that the current pullback could be an overreaction.
Before this week’s decline, Airbnb’s shares had seen a 16% increase this year. As of Thursday at 1356 GMT, shares were priced at $148.21. The company’s forward profit estimates trade at around 33.31 times, contrasting with Booking Holdings’ multiple of 19.40.
As investors and analysts continue to assess good stocks to invest in, best share to invest, and best stocks to invest, Airbnb’s recent hiccup presents a complex picture. While some see a temporary setback, others are looking closely at
