Airbnb slumps as gloomy forecast fans slowdown fears

Airbnb shares tumbled more than 6 per cent earlier this week after weak forecasts for the second quarter stoked investor fears about slowing growth at the vacation rental firm and took the shine off a strong quarterly profit beat.

The Easter holiday occurring in the first quarter rather than the second and currency-exchange impacts were partly to blame for Airbnb projecting current-quarter revenue below lofty Wall Street estimates.

It also forecast the growth rate of room nights booked would be relatively flat on a sequential basis, but the company’s average daily rate is expected to be modestly higher year-over-year.

Moderating leisure travel demand in the US has also been a concern for investors.

“Airbnb failed to deliver a beat/raise on nights, which we believe was necessary to ease concerns about slowing growth and risk of downside to consensus estimates for accelerating growth in (the second half of 2024 and in 2025),” Jefferies analysts said.

According to BTIG analysts, Airbnb’s forecast implied nights booked of about 125 million to 127 million in the second quarter. That compared with consensus estimates of 129.2 million, LSEG data showed.

“While Airbnb topped the Q1 guide, it was shy of more aggressive buyside expectations in the quarter and the Q2 outlook,” BTIG’s Jake Fuller wrote in a client note.

Still, some analysts noted the slump in shares was stemming from undue investor concern.

“We think the pullback is an overreaction to weaker second-quarter guidance … the outlook for 2024 is relatively unchanged, in our view,” said Morningstar analyst Dan Wasiolek.

Shares of Airbnb, which have gained 16 per cent so far this year through last close, were at $148.21 by 1356 GMT on Thursday. They were trading about 33.31 times their forward profit estimates, compared with Booking Holdings’ (BKNG.O) 19.40 multiple.