Airbnb (NASDAQ:ABNB) reported mixed second-quarter results on Tuesday, but shares plummeted more than 14% in premarket trading the next day as the company's third-quarter revenue forecast fell short of analyst expectations.
The vacation rental platform posted revenue of $2.75 billion for the second quarter, slightly above the consensus estimate of $2.74 billion and up 11% YoY.
However, adjusted earnings per share came in at $0.86, missing analyst projections of $0.91.
Nights and experiences booked rose by 9% compared to the previous year, which is 1% below consensus expectations. On a global scale, Latin America (LatAm) and Asia-Pacific (APAC) experienced the highest growth in nights and experiences booked, with increases of 17% and 19%, respectively.
Airbnb's outlook for the third quarter disappointed investors. The company expects revenue between $3.67 billion and $3.73 billion, below the $3.84 billion analysts were anticipating.
It also anticipates a slowdown in the growth of nights booked for the third quarter.
Management cited "some signs of slowing demand from U.S. guests" and shorter booking lead times globally as factors impacting the forecast.
"We're seeing shorter booking lead times globally and some signs of slowing demand from U.S. guests," said Brian Chesky, CEO of Airbnb. "However, Latin America and Asia Pacific continue to be our fastest growing regions."
Analysts at RBC (TSX:RY) Capital Markets reiterated a Sector Perform rating on ABNB stock after the report.
"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."
Wells Fargo (NYSE:WFC) analysts also shared negative sentiment, trimming their price target on ABNB shares from $129 to $100.
"Company suddenly facing multiple acute pressures — macro, micro and reinvestment. Many of these pressures likely building for some time. Room nights slowing and margins
resetting lower to drive new revenue initiatives in '25 and beyond," they wrote, reiterating an Underweight rating on the stock.
Airbnb's net income for the second quarter was $555 million, representing a 20% margin. Adjusted EBITDA rose 9% YoY to $894 million, while free cash flow jumped 16% to $1.0 billion.
While Airbnb expects modest year-over-year ADR growth in Q3, it anticipates Adjusted EBITDA to be flat compared to the same period last year, with margins declining as marketing expenses outpace revenue growth.
The company continued its share repurchase program, buying back $749 million of stock in Q2. Over the past 12 months, Airbnb has repurchased $2.75 billion of shares, reducing its fully diluted share count from 686 million to 673 million.