Airbnb stock crashes 15% in biggest intraday drop since 2020 listing after weak US sales hit Q2 profit; Q3 outlook grim

Airbnb Inc. shares crashed over 15 per cent on Wednesday, August 7, recording their biggest intraday drop since the vacation rental company went public in December 2020. The record crash came after net profit fell 15 per cent in the second quarter from a year earlier, as low US demand and higher income taxes cut into the short-term rental giant’s bottom line even as bookings and revenue rose.

This, and a grim Q3 outlook, weighed on the stock today. Airbnb issued another disappointing outlook and warned of slowing demand from US vacationers. Airbnb became the latest online travel company after Booking to warn that it was experiencing shorter booking lead time globally, which refers to the number of days between the reservation date and actual arrival.

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Airbnb Q2 Results

The San Francisco-based company reported on Tuesday net income of $555 million, or 86 cents per share, for the three months ended June 30. 

That compares with net income of $650 million, or 98 cents per share, in the same quarter last year. Revenue rose 11 per cent to $2.75 billion. The vacation-rental platform booked 125.1 million nights and experiences in the second quarter, a nine per cent increase from the same period a year earlier. 

Bookings rose 8.7 per cent in the second quarter to 125.1 million, falling well below analysts’ estimates. A shorter booking window can indicate consumers are booking travel at the last minute due to increased uncertainty and caution in spending.

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Airbnb Q3 outlook

Airbnb Chief Financial Officer Elinor Mertz said on a call with analysts on Tuesday that softness in long booking lead times was a big factor in its forecast.

Airbnb said it expects “sequential moderation” of booking growth in the third quarter, too, signalling that results will disappoint analysts who had projected an 11 per cent gain amid the peak summer travel season.

This is the third consecutive quarter that Airbnb has offered a downbeat forecast to investors. The latest bookings outlook sets it up for the slowest growth since 2020. Even as the pandemic retreats, headwinds have dogged the broader industry. 

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For its part, Airbnb said it’s “seeing shorter booking lead times globally and some signs of slowing demand from US guests.” The company added that Latin America and Asia Pacific remain its fastest-growing regions.

Airbnb forecasts revenue for the current quarter to be $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.

Airbnb also saw particularly strong gains among larger parties after honing its marketing materials in the US to convince more groups to choose multi-bedroom homes over hotel rooms. Nights booked for groups of more than five people jumped 16 per cent and were the fifth quarter's fastest-growing segment in the region.

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Chief Executive Officer Brian Chesky seemingly acknowledged the record share plunge in a post on X, the social media platform formerly 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.

The number of active listings on Airbnb surpassed eight 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.