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California-based Airbnb, Inc. (ABNB) operates a marketplace that enables hosts to offer stays and experiences to guests worldwide. Valued at a market cap of nearly $85 billion, the company acts as a broker. It charges a commission from each booking and primarily offers private rooms, primary homes, and vacation homes. It is expected to announce its fiscal Q3 earnings results on Wednesday, Nov. 6.
Ahead of this event, analysts project the vacation rental company to report a profit of $2.17 per share, down 9.2% from $2.39 per share in the year-ago quarter. The company has surpassed Wall Street's earnings estimates in three of the last four quarters while missing on one another occasion. Its earnings of $0.86 per share in the last quarter missed the consensus estimates by 6.5% and decreased 12.2% from a year ago.
The weaker-than-expected earnings performance was primarily driven by a 300bps contraction in the company’s operating margin, mainly due to a substantial rise in its product development and sales and marketing expenses. For fiscal 2024, analysts expect ABNB to report an EPS of $4.18, down 4.6% from $4.38 in fiscal 2023. Nevertheless, EPS is expected to increase 15.3% year-over-year to $4.82 in fiscal 2025.
Shares of ABNB have declined 2.5% on a YTD basis, significantly underperforming both the S&P 500 Index's ($SPX) 21.8% rise and the Consumer Discretionary Select Sector SPDR Fund’s (XLY) almost 12% return over the same period.
Shares of ABNB plunged 13.4% after its mixed Q2 earnings release on Aug. 6. The company missed Wall Street’s profit estimates, but its revenue rose 10.6% from a year ago to $2.8 billion and slightly surpassed the consensus estimates. Its Q2 EPS miss, along with its soft Q3 revenue guidance due to concerns about slowing travel demand in the U.S., might have dampened investor confidence, leading to a substantial fall in its share price.
Analysts' consensus view on Airbnb’s stock is cautious, with a "Hold" rating overall. Among 38 analysts covering the stock, nine recommend a "Strong Buy," one suggests a "Moderate Buy," 23 indicate a “Hold,” one recommends a “Moderate Sell,” and four suggest a “Strong Sell” rating. This configuration is less bullish than three months ago, with ten analysts suggesting a "Strong Buy." As of writing, the stock is trading above its mean price target of $129.88.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
