Airbnb's Margins Under Pressure Despite Q3 Beat, Analysts Caution

The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.

Piper Sandler On Airbnb

Analyst Thomas Champion maintained a Neutral, while raising the price target from $125 to $145.

Airbnb reported third-quarter gross bookings and revenues of $20.1 billion and $3.7 billion, up 10% year-on-year and 9% year-on-year, respective, with both coming in higher than estimates, Champion said in a note. The company's results were "solid" and reflected "firming demand trends," he added.

Airbnb repurchased shares worth around $1.1 billion, higher than its average of $500 million in the first and second quarters, with remaining authorization of $4.2 billion, the analyst stated. Management indicated expenses in marketing and investment in new businesses "to reignite growth," he further wrote.

JPMorgan On Airbnb

Analyst Doug Anmuth reiterated a Neutral rating, while lifting the price target from $121 to $142.

Despite the challenges faced in the second quarter, "broad-based strength in demand trends & a normalization of booking lead times" generated growth in GBV (gross booking value) through the third quarter and into the fourth, Anmuth said.

The company's fourth-quarter guidance of N&E (Nights & Experiences) acceleration "reflects continued healthy travel demand trends, a normalized booking window relative to last quarter, and success across core optimizations and market expansion, despite tougher comps," the analyst wrote. With investments in marketing and product development expected to continue through 2025, Airbnb's margins could remain under pressure in the near term, he added.

Goldman Sachs On Airbnb

Analyst Eric Sheridan reiterated a Sell, raising the price target from $103 to $107.

Airbnb indicated demand strength into the fourth quarter across its core and expansion markets, which build on "demand accelerating every month since July," Sheridan said. The company's revenue guidance for the fourth quarter reflects "an acceleration in room nights/experiences booked compared to Q3," he stated.

"Lead times have now normalized globally exiting Q3 and mgmt. pointed to factors like the Olympics contributing to softness in long lead time bookings at the start of the quarter," the analyst wrote. He added, however, that investments in long-term platform expansion efforts "created upward pressure on expenses (esp. marketing and product) into Q4," resulting in uncertainty around the company's margins in 2025.

Wedbush On Airbnb

Analyst Scott Devitt maintained an Outperform rating, while upping the price target from $135 to $155.

While reporting better-than-expected third-quarter results, Airbnb provided "a mixed outlook," Devitt said. The company's 2024 adjusted EBITDA margin guidance of approximately 35.5% implies fourth-quarter margins of about 27%, below the consensus of 29.7%, he added.

Margins will come under pressure as the company "continues to invest in marketing as well as product teams in advance of upcoming launches next year," the analyst stated. There are several potential catalysts in 2025, including mix shift to higher growth expansion markets, "take rate expansion supported by monetization improvements and new host/guest services, and growth beyond the core," he further wrote.

Check out other analyst stock ratings.

Truist Securities On Airbnb

Analyst Patrick Scholes reiterated a Hold rating and price target of $124.

Better-than-expected margins drove Airbnb's EBITDA to $100 million, higher than Street estimates, Scholes said. He added, however, that the situation is likely to reverse in the fourth quarter, as the guidance implies margins around 300 basis points (bps) lower than consensus.

Nonetheless, the third-quarter results and fourth-quarter earnings guidance indicate full-year adjusted EBITDA above the consensus, the analyst stated. Booking lead times normalized as the year progressed and the company did not mention signs of slowing demand in the U.S. like it had during its second-quarter release, he said.

Benchmark On Airbnb

Analyst Daniel Kurnos reaffirmed a Buy rating and price target of $155.

Airbnb delivered "a solid, all-around quarter," with every metric modestly beating consensus expectations, Kurnos said. The company's third-quarter "bodes well for our previously non-consensus, almost double-digit nights and experiences call for 4Q," he added.

The analyst stated, however, that Airbnb remains in "the sentiment penalty box after a couple of tough prints," which is why its stock declined when the fourth-quarter margin guidance came in below Street expectations.

The company's plans to launch several new "billion dollar standalone" businesses, investments in non-core market growth, and commentary on adding hotels on the platform "probably spooked the cash flow crowd a bit as well," he further wrote.

Needham On Airbnb

Analyst Bernie McTernan maintained a Hold rating on the stock.

Nights booked grew by 8.5% year-on-year in the third quarter, slowing by 20 bps sequentially, McTernan said. Despite a slow start to the quarter, "demand grew each month of 3Q, accelerating every month and into October," he added.

"The company attributed this to more normalized lead times, app bookings growth (58% of nights booked vs 53% YoY), and new first time bookers," the analyst wrote. Comps will get easier in September and October relative to November and December, and year-on-year trends are likely to stabilize, he stated.

Oppenheimer On Airbnb

Analyst Jed Kelly reaffirmed a Perform rating on the stock.

Although Airbnb's nights-booked decelerated sequentially by around 20 bps in the third quarter, this was better than Street’s expectations of 150 bps, Kelly said. The better-than-anticipated performance was due to strength in the Latin America and Asia Pacific regions, he added.

The company guided to fourth-quarter revenue of $2.39-$2.44 billion, which implies an acceleration in nights booked and bookings growth of 10%-12% year-on-year, the analyst stated. The full-year EBITDA margin guide of 35.5% implies "4Q EBITDA $642M, 26.6% margins contracting 670bps-y/y driven by S&M/ Product deleverage and lower take-rates from gift cards," he further wrote.

ABNB Price Action: Shares of Airbnb were down 8% to $135.56 at the time of publication on Friday.

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