Airbnb Inc. (ABNB) experienced a significant stock price plummet on Wednesday following the company’s prediction of decreased bookings and average daily rates for the ongoing quarter, compared to the previous year. This provoked a massive sell-off, leading to the largest single-day drop in the company’s shares since 2020, with a 14% plunge in early trading, based on Bloomberg data.
The disclosure came during Airbnb’s earnings call, where CFO David Stephenson acknowledged that the second quarter has presented more obstacles due to the lingering effects of the Omicron variant. Despite this, Stephenson indicated a maintained demand stability for the latter half of the year.
Contrary to the stock downturn, Airbnb’s Q1 financial results outperformed analysts’ predictions. The company declared a revenue of $1.8 billion, surpassing the projected $1.79 billion. The earnings per share (EPS) were reported at 18 cents, exceeding the anticipated 12 cents. Nevertheless, the actual Nights and Experiences Booked, totaling 121.1 million, marginally missed the projected figure of 122.4 million.
Airbnb also provided a Q2 revenue guidance range of $2.35 billion to $2.45 billion, aligning with the projected $2.42 billion. Additionally, the company announced a new $2.5 billion stock repurchase plan.
During the earnings call, Airbnb’s CEO Brian Chesky pinpointed that their most price-sensitive clientele are based in North America, predominantly the United States. Chesky stated, “The least expensive listings have the highest occupancy. As Airbnb rates continue to normalize, we expect our rates not to increase as quickly as hotel prices over the next few years, leading to a continued occupancy rise for more Airbnb listings.”
However, several Wall Street analysts adjusted their price targets for Airbnb’s stock following the company’s underwhelming outlook for 2023. John Colantuoni, an equity analyst at Jefferies, lowered his price target from $155 to $140, despite upholding a Buy rating, citing apprehensions over dwindling growth in Nights and Experiences and the need for price reduction to stimulate demand.
In a letter to investors, Airbnb emphasized a 19% growth in Nights and Experiences Booked in Q1 2023 compared to the same period last year, with a backlog of nights around 25% stronger than the previous year. The company’s current focus is on increasing host supply and heavily investing in marketing, especially ahead of the summer travel season.
The company stated in its investor letter, “Our aim is to make hosting as popular as traveling on Airbnb. To realize this, we are raising awareness about hosting, simplifying the process of getting started, and offering even better tools for hosts.”
Despite current challenges, Airbnb remains positive about the future, noting that online travel demand has fully rebounded post-pandemic.
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