Airbnb stock slides as light bookings overshadow record revenue

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Airbnb (NASDAQ:ABNB) shares marked a sharp decline on Wednesday as the market zeroed in on lighter than expected bookings and below-consensus bookings guidance for the third quarter.

Shares declined 5.88% in premarket trading on Wednesday.

Despite posting what management called its “most profitable quarter ever”, a projection of “stable bookings” into the third quarter came up short of what analysts had anticipated. Indeed, the record revenue notched in the second quarter aroused suspicion that travel demand is already peaking.

“We’re seeing some pull forward for summer travel here in Q2 and just the broader economic conditions overall,” CEO Brian Chesky told analysts on Tuesday. “We’re just seeing strong gross booking value growth relative to 2019. And to see further kind of quarter-over-quarter acceleration, we just need to see continued recovery in Europe and APAC, which remains significantly depressed.”

Bank of America analyst Justin Post noted that the slight miss on bullish booking estimates and a lack of acceleration indicated by the “stable” forecasts likely encourages bears on the name.

“Bears will point to signs of a potential consumer slowdown given elevated travel costs, macro pressures and possible shift back to hotels,” he explained in a note on Wednesday.

He noted that while the year over year numbers remain attractive, a stabilized booking trend would represent a slight deceleration from 2019. Additionally, the pullout of China in July reduces the overall addressable market for the online accommodation platform. As such, Post reeled in his full-year booking estimates and trimmed his price target on shares from $130 to $125 on the mixed earnings result.

In a similar vein, Evercore ISI analyst voiced concern that the softer than anticipated guidance could represent a turning point in the company’s post-pandemic recovery.

“It is possible that the soft Bookings and Nights Guides for Q3 represent a negative inflection point,” he wrote on Wednesday. “It is concerning that Nights are guided to be down approx. 4% quarter over quarter vs. 2% quarter over quarter growths in Q3 2018 and Q3 2019.”

Still, Mahaney indicated he remains confident in the long-term trajectory for the stock as the deceleration “is more of a timing issue and possibly a macro issue” as opposed to a market share or competition issue. Instead, he advised an “expectations reset” was necessary for the stock.

“There is no question that ABNB’s results have been more resilient over the last two years than just about any leisure travel asset on the planet,” Mahaney concluded, reiterating his Buy-equivalent rating on the stock.

Read more on the key details of the earnings print.