Airbnb stock opened trading sharply lower Thursday, despite posting first quarter results that topped expectations for sales and earnings. The revenue outlook for the current quarter from Airbnb came in lower than analysts expected.
In results posted late Wednesday, Airbnb said that it earned 41 cents per share on sales of $2.14 billion for the March-ending quarter. On average, analysts projected the San Francisco-based company would earn 23 cents per share on sales of $2.06 billion, according to FactSet.
For the same period a year earlier, Airbnb posted adjusted earnings of 18 cents per share on sales of $1.82 billion. Sales increased 18% year over year.
For the current quarter, Airbnb guided for revenue of $2.71 billion, at the midpoint of its given range. Analysts were projecting Airbnb to tally $2.74 billion in sales for the June-ending quarter, according to FactSet.
On the stock market today, Airbnb stock is down 6% at 148.06 in morning trades.
Airbnb Q2: Holiday Headwinds
In its shareholder letter, Airbnb said that its second quarter faces a significant "sequential headwind" after Leap Day and the timing of the Easter holiday (March instead of the more common April) boosted first quarter results.
Further, the company expects the growth rate for nights booked to be "relatively stable" to what it recorded in the first quarter.
Airbnb "is arguably the preeminent brand in online travel, but growth in the U.S. and EU appears stuck in the single digits which is not how the stock is priced," wrote RBC Capital analyst Brad Erickson in a client note Wednesday. He is neutral on the stock.
Things could be looking up in the second half of the year. Airbnb's shareholder letter said the company is seeing "robust demand" for summer travel around international events such as the Olympics in Paris and the European Cup in Germany.
But Airbnb also plans to spend more on marketing. Jefferies analyst John Colantuoni wrote to clients Wednesday that Airbnb's "disappointing outlook for EBITDA (earnings before interest, taxes, deprecation and amortization) is partly the result of plans for higher marketing, a potential sign that the cost of growth is increasing." He reiterated a neutral rating.
Still, Airbnb says it got a boost from an April solar eclipse that was most prominent across North America. More than 500,000 guests stayed at an Airbnb during the event, the company said.
"We saw more than twice as many nights stayed on Airbnb along the direct path of the eclipse for the event compared to the prior year, with many of these locations in rural areas with no hotels," the company said in its shareholder letter.
Airbnb Revenue Growth Accelerates
Overall sales growth for Airbnb ticked up in the first quarter to 18% from 17% year-over-year growth in the fourth quarter of 2023.
The total value of nights and experiences booked on Airbnb increased 12% year over year for Q1, to $22.9 billion.
Bookings growth was strongest in the Asia Pacific and Latin America regions for Airbnb. North American bookings growth was "stable," the company said, with strength for larger group travel.
On the company's call with analysts, Chief Executive Brian Chesky highlighted that the company has launched 430 new features and upgrades to its app in the past few years. That includes the launch late last year of "Guest Favorites" that spotlights top-performing listings.
Airbnb also recently launched a set of experiences available through its app called "Icons." They include the option to stay in a home modeled after the balloon-powered floating house from the Pixar film "Up." Another option is staying in the Ferrari Museum in Italy for the night.
Chesky told analysts that the Icons offering can "help change the way people think about Airbnb and what we offer. And this is going to be critical as we expand beyond accommodations in the coming years."
Airbnb Stock: Technical Ratings
Including Thursday's slide, Airbnb shares have gained 8.6% this year, roughly in-line with the overall gain for the S&P 500. Further, Airbnb stock has advanced 18% in the past 12 months, lagging a 25% gain for the S&P 500.
Coming into the report, Airbnb stock had an IBD Composite Rating of 88 out of a best-possible 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one rating. The best growth stocks have a Composite Rating of 90 or better.
Further, Airbnb's IBD Relative Strength Rating was 82 out of 99.
Prior to earnings, Airbnb stock was trading below a 170.10 buy point from a 32-day consolidation pattern, according to MarketSmith.
