Airbnb stocks took a massive hit when they dropped by around 8 percent on May 9, following forecasts for a weak second quarter, which has sparked concerns among investors that the company’s slowing growth may set a precedent for the upcoming months.
Lofty Wall Street estimates were overshadowed by several factors, including the Easter holiday break falling into the first quarter as opposed to the second, as well as currency-exchange impacts, both of which contributed to the comparatively slow performance contrasted with a more sunny outlook over the first quarter.
The holiday was beneficial to the first quarter as more people traveled, but it may affect bookings in the second quarter, the company said.
Airbnb’s first-quarter revenue rose 18 percent year-over-year to $2.14 billion, while for the second quarter, the company will likely see below the forecasted $2.68 billion and $2.74 billion.
Forecasts also included a lower growth rate on rooms booked on a sequential basis, although the vacation rental firm’s daily average rate is anticipated to be modestly higher year-over-year.
“We’d like to deliver higher growth than stable growth, but our outlook obviously reflects the trends that we have seen quarter-to-date,” Chief Financial Officer Ellie Mertz said on a call with analysts.
Investors also expressed concerns over normalizing leisure travel demand in the United States.
“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.
Accommodation companies in the first quarter have seen the demand for travel in regions outside of North America boost earnings as travel accelerates in Asia-Pacific and Latin America.
According to BTIG analysts, Airbnb’s forecast is based on around 125 million to 127 million nights booked in the second quarter.
Consensus estimates according to LSEG data show just over 129 million nights.
“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.
But according to some analysts, the downtrend in shares could be the result of undue concern from investors.
“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 have gained 16 percent so far this year through last close. The shares stood at $148.23 as of 1625 GMT on May 9.
They were trading about 33.31 times their forward profit estimates, compared with Booking Holdings’ 19.40 multiple.
Reuters contributed to this article.