Airbnb,
like much of the travel industry, had a stellar 2023 as demand for vacations boomed. But it’s starting to work against the short-term lodgings provider.
The company rounded off the bumper year with a revenue beat, though it missed earnings expectations largely due to an income tax settlement with Italy.
Revenue grew 17% to $2.2 billion in the fourth quarter, beating estimates of $2.16 billion. Full-year revenue rose 18% to $9.9 billion. The number of nights and experiences booked rose 12% year over year to 98.8 million in the final three months of the year—its fourth highest quarter ever.
Looking ahead to the current quarter, though, and tough comparisons with the previous year look set to put the stock under pressure.
Airbnb
said it expects the growth rate of nights and experiences booked to moderate relative to the fourth quarter—so a deceleration from 12%. The company’s first quarter of 2023 was a strong one—bookings surged 19%.
Easter falling in March this year will boost revenue growth in the first quarter, but at the expense of the second quarter.
“Overall, Airbnb called out stable demand trends, but tough comparisons and Easter timing create choppiness,”
J.P.Morgan
analyst Doug Anmuth said in a note Wednesday, as he maintained a Neutral rating on the stock.
That choppiness was evident after the company’s earnings. The stock initially rose as much as 9% in after-hours trading Tuesday but fell more than 4% to $144.21 early Wednesday. The shares are up around 70% since the start of 2023.
With demand normalizing and the stock trading at a 40% premium to its peers, according to FactSet data, Airbnb needs a plan for growth. It has one—through its initiative to expand “beyond the core,” investing in underpenetrated international markets.
The company said it would be a “gradual, multi-year journey” and that it would share more information about the plans later in 2024. Investors, and analysts, may well have been hoping for more.
“With no positive revenue impact from these new ‘beyond-the-core’ expansion initiatives likely until 2025 and our expectation of a more normalized growth trajectory for Airbnb’s core accommodations business, we expect it may prove difficult for [the] shares to maintain the magnitude of its valuation premium vs. peers,” D.A. Davidson analyst Tom White said in a note Wednesday. He downgraded the stock to Neutral from Buy, maintaining a price target of $145.
A Neutral rating seems to be the consensus right now. Seaport Research analyst Aaron Kessler said he has a positive fundamental view on the stock given the company’s long-term growth potential, particularly internationally, and continued margin expansion, but has a Neutral rating. “We believe the shares are fairly valued at current levels,” he said.
Online travel agency
Expedia
rose 0.8% ahead of the open, while rival
Booking
was flat.
Write to Callum Keown at [email protected]
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