Airbnb Stock Falls as Travel Spending Slowdown Looms

Airbnb Stock Falls as Travel Spending Slowdown Looms

Airbnb Shares Stumble Amid Travel Spending Slowdown Predictions

Airbnb's Q1 Earnings Exceed Expectations but Guidance Falls Short

Shares of Airbnb took a hit in premarket trading in New York on Thursday. Despite exceeding earnings expectations for the first quarter, the home rental company's guidance was weaker than anticipated. This comes on the heels of Bank of America analysts noting missed earnings from other travel companies, sparking concerns of a potential downturn in consumer travel spending. Airbnb reported the following for the first quarter, in comparison to consensus expectations from Bloomberg: - Revenue: $2.14 billion, up 18% year-on-year, estimated at $2.06 billion - Gross booking value: $22.9 billion, up 12% year-on-year, estimated at $22.32 billion - Adjusted Ebitda: $424 million, up 62% year-on-year, estimated at $326.3 million - Adjusted Ebitda margin: 20% compared to 33% quarter-on-quarter, estimated at 15.9% - EPS: 41c versus 18c year-on-year, estimated at 30c - Nights and experiences booked: 132.6 million, up 9.5% year-on-year, estimated at 131.81 million - Gross booking value per nights and experiences booked: $172.88, up 2.6% year-on-year, estimated at $169.38 - Free cash flow: $1.91 billion, up 21% year-on-year, estimated at $1.07 billion

Slowest Growth Rate Since 2020

Despite exceeding revenue expectations for the quarter, the number of nights and experiences booked, a critical metric in the industry, rose by only 9.5%, falling short of the anticipated 12% increase. According to Bloomberg, this represents the slowest growth rate since 2020, indicating that overall demand has returned to normal following an initial post-pandemic travel surge.

Lower than Expected Q2 Revenue Forecast

The focus of Wall Street analysts was Airbnb's second-quarter guidance. The company now predicts revenue for the quarter ending in June to be between $2.68 billion and $2.74 billion, down from $2.74 billion. In a statement, Airbnb cited the Easter holiday and currency headwinds as some of the factors contributing to the slowdown in travel spending, ahead of the peak travel season in July.

Analysts' Take on Airbnb's Performance

Analysts were particularly concerned with the "underwhelming" room nights metric and weak second-quarter guidance, which overshadowed the better-than-expected first-quarter earnings. The following are some of the analysts' views: - Mandeep Singh, Bloomberg Intelligence analyst, suggested a further deceleration in room-night growth, with average daily rates likely to remain a slight tailwind. - Brad Erickson, RBC Capital Markets analyst, noted that the Q2 revenue guide was slightly below consensus. - Brian Nowak, Morgan Stanley analyst, expects stable-to-slowing room night growth and more use of marketing to drive growth. - Doug Anmuth, JPMorgan analyst, expects 2Q to be stable and acceleration in 3Q. - Ronald Josey, Citi analyst, stated that the results were better than expected, but the outlook is below the consensus.

Travel Spending Slowdown Impacting Other Companies

The slowdown in travel spending has also affected other companies in the industry. Last week, Booking Holdings provided worse-than-expected guidance, and Expedia Group reported disappointing results. This led Bank of America's trading desk to question whether consumer travel spending was easing.

Conclusion

In conclusion, the end of the pandemic could see a decline in revenge travel. What are your thoughts on this matter? Share this article with your friends and let us know your views. Don't forget to sign up for the Daily Briefing, which is every day at 6pm.

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