Airbnb's warning on U.S. demand 'will likely only further stoke the soft-consumer thesis,' analyst says

By Bill Peters

Home-sharing company said it expects a 'moderation' in gains for nights and experiences booked

Shares of vacation-rental platform Airbnb Inc. sank on Tuesday after it warned of "some signs of slowing demand from U.S. guests," as travelers hold off on booking overnight stays for later in the year and temper their spending elsewhere.

The warning, RBC analyst Brad Erickson said in a note on Monday, "will likely only further stoke the soft-consumer thesis adopted by many market participants at this point."

Airbnb (ABNB) forecast sales of $3.67 billion to $3.73 billion for its current third quarter, below FactSet analyst estimates for $3.84 billion. It also said that for the third quarter, it expects a "moderation" in gains for nights and experiences booked on the platform when compared to the second quarter that ended on June 30.

The company, known for its alternative lodging arrangements, made the forecast as it invests in expanding in Latin America, Asia and Europe, and in trying to improve its platform to make it easier for guests to select rentals and help new hosts with pricing. Longer term, those efforts would help cushion Airbnb from temporary challenges to the economy, Chief Executive Brian Chesky said during the company's earnings call Tuesday.

For now, consumers continue to grapple with higher prices and seek cheaper alternatives for things like takeout dining and household basics.

"Latin America and Asia-Pacific continue to be our fastest-growing regions," Airbnb said in its second-quarter shareholder letter on Tuesday. "However, we are seeing shorter booking lead times globally and some signs of slowing demand from U.S. guests."

Shares sank 16.6% after hours on Tuesday. The stock is down 4.3% so far this year.

During Airbnb's earnings call, Chief Financial Officer Ellie Mertz said that those lead times - or how far in advance a traveler booked a rental - initially shrank as the pandemic first hit, as people lost confidence in their ability to book trips further out. That trend, she noted, reversed in the travel boom that followed.

Now, she said, trends were returning to normal.

"It's not that consumers are not necessarily going to book that trip for Thanksgiving or Christmas," she said. "It just appears that they have not booked it yet."

Airbnb reported second-quarter net income of $555 million, or 86 cents a share. That was down from $650 million, or 98 cents a share, in the same quarter last year.

Revenue climbed 11% year over year to $2.75 billion. Airbnb's gross booking value - or the dollar value of all things booked on its platform - rose 11% year over year to $21.2 billion.

Analysts polled by FactSet expected Airbnb to earn 91 cents a share on revenue of $2.74 billion, and forecast gross bookings of $21.27 billion.

The after-hours action comes a day after Monday's stock-market tantrum, which followed a U.S. jobs report that raised concerns over an economic slowdown as well as fears that the Federal Reserve is moving too slowly on cutting interest rates.

Results from companies like McDonald's Corp. (MCD), Starbucks Corp. (SBUX) and Clorox Inc. (CLX) have all raised concerns about demand from shoppers, as they struggle with inflation and seek out discount sales and cheaper dining options.

Delta Air Lines Inc. (DAL) last month said that while travel demand was still strong, a corresponding expansion of available seats and flights had weighed on profits. American Airlines Inc. (AAL) also said there were a bit too many unfilled seats on its flights, leading to price cuts.

Tripadvisor Inc. (TRIP) on Tuesday noted "mixed signals in the macroeconomic environment" and "narrowing international booking windows and moderated pricing." But it said people were still interested in traveling. Tripadvisor shares sank 12% after hours.

Events like the Summer Olympics in Paris and the European Football Championship in Germany helped boost demand for Airbnb during the second quarter. And as it expands its listings, the company has cut thousands of those with lower-quality ratings. It has also begun offering a wider array of pop-culture-themed stays.

-Bill Peters

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08-06-24 2009ET

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