Airbnb’s Q3 experienced fluctuating stock movement following its mixed third-quarter results, with shares bouncing between a high of an 11% increase and a low of a 4% drop before eventually closing down over 2% at $143.21 in after-hours trading. The company reported earnings of $2.13 per share on revenues of $3.73 billion for the September-ended quarter. While earnings narrowly missed analyst expectations of $2.14 per share, revenues slightly surpassed the $3.72 billion forecast, according to FactSet.
Airbnb’s guidance for the fourth quarter projects revenues of approximately $2.42 billion, aligning closely with analyst predictions for the holiday quarter. In its shareholder letter, the company highlighted strong demand trends in Q4, especially across core and emerging markets, and anticipated higher growth in “Nights and Experiences Booked” year-over-year in Q4 compared to Q3.
Growth and Earnings Insights
Airbnb’s Q3 saw a 10% increase in year-over-year revenue while earnings dropped 68% due to a one-time tax benefit of $2.8 billion included in the previous year’s earnings. The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) rose 7% to $1.96 billion, surpassing analyst expectations of $1.86 billion. Gross bookings also climbed 10% to reach $20.1 billion, exceeding estimates of $19.8 billion.
Airbnb noted a slower start in bookings from North America, its largest market, which then accelerated over the quarter. In a statement, the company indicated that domestic travel remained strong in the region, with non-urban destinations and larger group travel showing the fastest growth rates.
Stock Performance and Outlook
Airbnb’s Q3 followed a strong 2023, rising 60% during the “revenge travel” trend that fueled the company’s entry into the S&P 500. However, this year, Airbnb’s stock gains have been modest at just 7%, trailing the S&P 500’s 25% growth year-to-date. The company previously warned of softening U.S. demand in its second-quarter report, which led to a 13% dip in its stock at that time. However, shares have recently rebounded, gaining 7% this week as broader markets rallied after the U.S. presidential election results.
Despite its recovery, Airbnb’s stock holds a somewhat moderate Composite Rating of 68 out of 99, as assessed by IBD Stock Checkup. The company’s Relative Strength Rating stands at 57, indicating it has outperformed 57% of stocks in the IBD database over the past year, below the typical target of 80 for strong growth stocks.
