(Bloomberg) -- Airbnb Inc. shares plunged by the most in nearly two years after the company issued yet another disappointing outlook and warned of slowing demand from US vacationers.
Bookings rose 8.7% in the second quarter to 125.1 million, falling well below analysts’ estimates. And Airbnb said it expects “sequential moderation” of growth in bookings in the third quarter, too, signaling that results will disappoint analysts who had projected an 11% gain amid the peak summer travel season.
This is the third consecutive quarter that Airbnb has offered a downbeat forecast to investors. The company’s latest bookings outlook sets it up for the slowest pace of growth since 2020. Even as the pandemic retreats, headwinds have dogged the broader industry. Last week, Booking Holdings Inc. gave worse-than-expected guidance, blaming “mild moderation” in the European travel market and consumers who are opting for lower-star hotels and shorter stays, particularly in the US.
Airbnb’s shares fell 13.4% to close at $113.01, the biggest decline since Nov. 2, 2022. The stock had fallen as much as 15% earlier on Wednesday, notching its largest intraday drop since the company went public in December 2020. The slide wiped out $11.2 billion in market value, resulting in a cumulative $3.5 billion decline in the net worths of Airbnb’s trio of founders.
Airbnb’s outlook “will likely only further stoke the soft consumer thesis,” RBC Capital Markets analysts led by Brad Erickson said in a note, calling the company’s report disappointing.
For its part, Airbnb said it’s “seeing shorter booking lead times globally and some signs of slowing demand from US guests.” Latin America and Asia Pacific continue to be its fastest-growing regions, the company added.
Airbnb forecast revenue for the current quarter of $3.67 billion to $3.73 billion, short of analysts’ consensus of $3.84 billion. The company cited its challenges with foreign currency exchange rates.
Second-quarter revenue beat estimates, jumping 11% to $2.75 billion. But the 8.7% increase for nights booked fell short of a 9.8% estimate.
Airbnb, which specializes in shared homes and vacation rentals, saw a slight acceleration in growth of North American nights booked in the second quarter. It highlighted the week of July 4 as the “single highest week of revenue ever” in the region.
The company also saw particularly strong gains among larger parties after honing its marketing materials in the US to convince more groups to choose multibedroom homes over hotel rooms. Nights booked for groups of more than five people jumped 16% and was the fastest-growing segment in the region for a fifth quarter, Airbnb said.
The continued recovery in international travel has been a bright spot for Airbnb and the industry at large. But Airbnb said the more than doubling of nights booked in Paris during the Olympic Games in the second quarter made a “relatively small” contribution to company’s business in Europe, the Middle East and Africa.
The company has been investing more into less mature markets overseas, including the introduction of limited-edition stays inspired by local cultural icons. That will likely weigh on margins in the near term: Airbnb expects marketing expenses to grow faster than revenue in the third quarter, partially due to investments in new growth markets.
Several analysts took notice of the possible shrinking of margins: “Kicking up marketing spend at a moment when demand is softening tends to be the ultimate backbreaker for an internet stock in our experience,” RBC said in a note.
Chief Executive Officer Brian Chesky seemingly acknowledged the record share plunge in a post on X, the social media platform formerly known as Twitter. “I’m confident it’s a good time to buy,” he wrote.
Chesky has said the company he co-founded in 2007 is ready to expand beyond its core offerings. He spent the past year refining Airbnb’s product to make listings more reliable and affordable for guests, and to encourage more people to sign up as hosts.
That work has been paying off. The number of active listings on Airbnb surpassed 8 million in the second quarter, even as it took steps to remove more than 200,000 lower-quality listings. Chesky said the company hopes to attract more inventory by introducing a new co-hosting marketplace in October.
The marketplace would match people who have homes — but don’t have time to host — with those who have the time but don’t have a property.
Airbnb will also relaunch its Experiences business for tours, classes and workshops next year, he said, with an emphasis on better marketing and affordability. The company will make it easier to discover the feature on the app as well.
Other executives have hinted at new guest-related services in the past few months. Chief Business Officer Dave Stephenson has signaled that new services on tap for next year could include luxury amenities such as personal chefs, midweek cleaning and in-home massages. Chesky has also said he will share more details on the company’s use of artificial intelligence later in the year.
(Updates with shares after the close in first and fourth paragraph)
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