Real-Time BNB Signal Analytics
Real-Time BNB Signal Analytics
Airbnb is about to drop its Q3 earnings report, and Wall Street's got its expectations dialed in: $2.29 per share, a 7.5% year-over-year bump, and $4.08 billion in revenue, a 9.5% rise. But can Airbnb actually clear that bar? Their recent track record is…spotty (to be kind).
Let's rewind to Q2. Airbnb posted a 13% revenue increase, hitting $3.1 billion, and a 34% adjusted EBITDA margin. Net income clocked in at $642 million, translating to $1.03 EPS, up 16% and 20%, respectively. Not bad, right? Except, the devil's in the details. Growth in North America slowed, and the company warned that comparisons would get tougher as we rolled into Q3 and Q4.
That's the setup. Now, the question becomes: did Airbnb pull a rabbit out of its hat, or are we looking at a continued deceleration? UBS analyst Stephen Ju trimmed Airbnb's price target to $145 (from $148), keeping a Neutral rating. His concern? Shifting internet traffic due to the rise of ChatGPT. His reasoning? Airbnb is "most insulated" due to its fragmented inventory. It's like saying a house made of straw is safer in a hurricane because there's more straw. I'm not entirely buying it.
Brian Chesky, Airbnb's CEO, has mentioned interest in ChatGPT's AI tech but is holding off, claiming it's not ready. Which raises a point: are they really not using AI to optimize bookings or pricing? Every travel platform is knee-deep in algorithms. This feels like a PR deflection.
KeyBanc's Sergio Segura rates the stock at Sector Weight, noting slower earnings growth and minimal margin expansion due to investments in scaling new products. He calls the shares "fairly valued." Which is analyst-speak for "meh."
Now, consider this: Figma, The Trade Desk, and Airbnb are all staring down the barrel of earnings reports this week. 3 Stocks That Can Break Your Heart This Week Figma and Trade Desk have seen their shares hammered recently (down 61% and 43% in three months, respectively). Airbnb? Essentially flat. But flat doesn't mean healthy.
The headwinds are real. Companies are dragging employees back to the office, which hurts the digital nomad crowd. Consumer spending is softening. And geopolitical tensions are throwing a wrench into international travel plans. We're already seeing the deceleration. That 9% revenue growth Wall Street's projecting for this report is a step down from the 13% we saw last quarter.
And this is the part of the report that I find genuinely puzzling: Airbnb announced a $6 billion share buyback authorization this summer. The shares trading at 27 times next year's profit target may not seem like a bargain, but it's a historically low multiple that will work out once bookings growth starts accelerating again.
Is that a sign of confidence or a desperate attempt to prop up the stock? Buybacks are often a mixed signal. They can indicate a belief that the stock is undervalued, but they also artificially inflate EPS (earnings per share), making the company look healthier than it is.
Airbnb's Q3 is a gamble. Can they defy the slowing growth trend? Can they convince investors that their long-term strategy is solid? Or are we looking at another disappointment? The stock's consensus price target is $140.35, implying a 14.71% upside. But those targets are based on expectations, not guarantees. And in this market, expectations can be as flimsy as a beachfront timeshare offer.
Ultimately, Airbnb's Q3 isn't just about hitting numbers. It's about narrative. Can they spin a story that convinces investors the growth slowdown is temporary? Or will the data reveal a more troubling truth? I suspect the latter.