Airbnb Inc. (ABNB)
Airbnb Inc (ABNB) saw significant analyst updates following its second-quarter earnings report, which fell short of expectations despite an increase in revenue. The earnings miss was the catalyst in the recent sell off of the company’s shares.
Q2 Financial Performance
For Q2 2024, Airbnb reported revenue of USD 2.75 billion, marking an 11% increase from the same period last year. However, its net income declined by 15% to USD 555 million, leading to a drop in profit margin from 26% to 20%. Earnings per share (EPS) fell to USD 0.87, missing analyst estimates by 5.7%. The decline in EPS was attributed to rising expenses despite the revenue growth.
Analyst Reactions and Target Adjustments
- Barclays and Wells Fargo & Company have lowered their targets to USD 100, down from USD 110 and USD 129, respectively, maintaining an “Underweight” rating.
- BMO Capital Markets reduced its target to USD 130 from USD 151, keeping a “Market Perform” rating.
- UBS cut its target to USD 134 from USD 160, while maintaining a “Neutral” outlook.
- RBC lowered its target to USD 120 from USD 150, retaining a “Sector Perform” rating.
- Robert W. Baird & Co. reduced its target to USD 120 from USD 140, maintaining a “Neutral” stance.
- Deutsche Bank significantly reduced its target to USD 90 from USD 143, holding a “Hold” rating.
- J.P. Morgan Chase & Co cut its target to USD 121 from USD 145, maintaining a “Neutral” rating.
- B. Riley Financial lowered its target to USD 140 from USD 150, keeping a “Neutral” outlook.
- Wedbush Securities decreased its target to USD 135 from USD 165, while maintaining an “Outperform” rating.
- Benchmark Research adjusted its target to USD 155 from USD 190, keeping a “Buy” rating.
Overall, the average analyst target price for Airbnb over the next 12 months is USD 145.20. Stock Target Advisor’s analysis remains “Slightly Bullish,” noting 10 positive and 6 negative signals. Despite this, the stock’s recent performance has been under pressure, reflecting broader concerns about the company’s profitability and expense management.
Outlook
Looking ahead, Airbnb’s revenue is forecast to grow at an average annual rate of 10.0% over the next three years. This growth rate is slightly above the 9.6% forecast for the US hospitality industry. However, investor sentiment remains cautious, influenced by the recent earnings miss and shifting analyst perspectives.
While Airbnb continues to show robust revenue growth, the significant drop in profitability and recent analyst downgrades have raised concerns among investors. The company’s ability to manage expenses and maintain profit margins will be critical in shaping its future performance and stock valuation.
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