Airbnb Invests 'For Growth While Consumer Slows'; 6 Analysts Cut Forecasts After Q2 Results

Airbnb Inc ABNB shares tanked in early trading on Wednesday, after the company reported downbeat second-quarter earnings.

The results came amid an exciting earnings season. Here are some key analyst takeaways.

• JPMorgan analyst Doug Anmuth reiterated a Neutral rating, while reducing the price target from $145 to $121.
• Goldman Sachs analyst Eric Sheridan maintained a Sell rating, while slashing the price target from $130 to $111.
• BMO Capital Markets analyst Brian Pitz reaffirmed a Market Perform rating, while cutting the price target from $151 to $130.
• Benchmark analyst Daniel Kurnos reiterated a Buy rating, while reducing the price target from $190 to $155.
• Wedbush analyst Scott Devitt maintained an Outperform rating, while slashing the price target from $165 to $135.
• Piper Sandler analyst Thomas Champion reaffirmed a Neutral rating, while cutting the price target from $155 to $125.
• Truist Securities analyst Patrick Scholes reiterated a Hold rating and price target of $134.
• RBC Capital Markets analyst Brad Erickson maintained a Sector Perform rating and price target of $150.
• Oppenheimer analyst Jed Kelly reaffirmed a Perform rating on the stock.

Check out other analyst stock ratings.

JPMorgan: Airbnb's second-quarter results came broadly in-line with expectations, Anmuth said in a note. He added, however, that growth investments began weighing on margins and the company's adjusted EBITDA margins contracted by around 50 basis points (bps) year-on-year.

The company's third-quarter guidance implies a margin contraction of 400 to 500 bps, the analyst further stated. Airbnb is focusing on "expanding beyond the core, growth sustainability is a concern, with "incremental growth needing to come from outside the core in a more mature online travel industry," he further wrote.

Goldman Sachs: Airbnb's overall earnings were "solid," with gross bookings and revenues in-line with estimates and adjusted EBITDA well ahead, Sheridan said. He added, however, that investor focus is likely to be on the forward commentary, with management guiding to third-quarter revenues below Street estimates at the mid-point.

The third-quarter room night growth projection also disappointed, the analyst stated. The company "continued to note 2024 as a year focused on investments, while reiterating margin commentary," he further wrote.

BMO Capital Markets: The shortening of the booking window in July "produced lower-than-expected 3Q24E outlook vs. BMO/Street expectations," Pitz said. He added that there is lack of visibility into the fourth quarter, "due in part to an uncertain consumer."

The company's sales and marketing costs have risen, "given Social Media acceleration and relatively uncertain ROAS vs. traditional SEO," the analyst stated. "Given recent headwinds the overall sentiment in the OTA space is shifting more neutral, offset by M&A upside opportunity.”

Benchmark: "In what is turning out to be the worst quarter for travel stocks in recent history, Airbnb followed the trend of missing nights or gross booking expectations, while beating on revenue and EBITDA thanks to better ADRs, mix, timing, and more cautious spending," Kurnos wrote in a note.

"And, like the group, Airbnb guided to a 3Q nights decel vs. an expected acceleration, with a softer EBITDA outlook on an incremental lean into marketing spend," he added.

Wedbush: Airbnb reported mixed second-quarter results and provided disappointing guidance for the third quarter, Devitt said. "We had expected accelerating room night growth in 2H supported by higher marketing spend, ongoing international expansion, continued health in mature markets, and easing Y/Y comps," he added.

While the booking window is shrinking, there is near-term macro uncertainty, the analyst stated. "We think an acceleration is unlikely to materialize in the near-term, consistent with more recent commentary and outlooks from the broader travel industry," he further said.

Piper Sandler: Airbnb reported its second-quarter results mostly in-line with expectations and a weaker third-quarter guidance, Champion said. The company cited a slowdown in demand trends so far this and margin pressure due to investments, he added.

"Performance marketing could provide a near-term boost to numbers, but in our view raises longer-term questions about growth," the analyst wrote.

Truist Securities: Although Airbnb is witnessing shorter booking lead times globally, the company is "far more leisure-centric than the typical hotel company," which is why the financial impact on the third quarter is more severe, Scholes said.

"While 2Q EBITDA was +4.5% above consensus, this result will play second fiddle to the weak guidance as far as how the stock trades tomorrow," the analyst wrote. Management's third-quarter EBITDA guidance implies flat year-on-year growth, which is well below consensus expectations of about 10%, he further stated.

RBC Capital Markets: Airbnb reported solid second-quarter results, with "gross booking value roughly in-line with the Street on a very modest room nights offset by gross daily rate upside," Erickson said. The company's EBITDA beat was driven by margin leverage from better operating expenses, he added.

The company's third-quarter guidance came below the Street and GBV is expected to decelerate, the analyst stated. "Further, aside from faster growth expected out of LatAm and APAC, the company called out seeing signs of slowing demand from U.S. guests which will likely only further stoke the soft consumer thesis adopted by many market participants at this point," he further wrote.

Oppenheimer: Airbnb reported another quarter of "sequential night deceleration from a shortening US booking window (potentially economic related)," Kelly said.

Management guided to flat EBITDA growth, "implying margins compress ~400– 450bps on marketing and product investments to accelerate growth, especially non-core markets," he added.

ABNB Price Action: Shares of Airbnb had declined by 12.88% to $113.66 at the time of publication on Wednesday.

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