Airbnb Stock (ABNB) Underperforming Ahead of Earnings – What To Expect

Airbnb (NASDAQ: ABNB) is set to release its third-quarter earnings report on Thursday, with analysts anticipating significant revenue growth and increased adjusted earnings. The company is projected to report revenue of $4.08 billion, representing a 9.3% increase, and adjusted earnings of $2.31 per share.

These projections follow strategic initiatives undertaken by Airbnb to enhance guest engagement and expand its offerings. Notably, the company has reintroduced its ‘Experiences' platform, which allows users to book local activities, and has launched a ‘Services' feature.

This new addition enables guests to arrange services such as massages and personal training sessions in specific markets, aiming to diversify revenue streams beyond accommodation bookings.

During its second-quarter earnings call, Airbnb had already adjusted its Q3 revenue guidance upwards to a range of $4.02 billion to $4.1 billion. Concurrently, the company reaffirmed its commitment to maintaining a full-year EBITDA margin of at least 32% (EBITDA calculations are adjusted for stock-based compensation and other non-cash items).

Market analysts have largely maintained an optimistic outlook for the company's near-term performance. KeyBanc Capital Markets, for instance, has revised its Q3 and Q4 gross booking value (GBV) and EBITDA estimates for Airbnb. This upward adjustment is attributed to robust travel demand observed across global markets and favorable foreign exchange tailwinds, as detailed in a note by analyst Sergio Segura.

Further analysis suggests that Airbnb's continued growth could be significantly influenced by its performance in emerging markets. Regions such as Japan, Germany, and Brazil are identified as critical for reaccelerating the growth of ‘Nights and Seats Booked,' a key metric for the company's operational expansion. Investor sentiment reflects these positive indicators, with earnings per share (EPS) and revenue estimates experiencing more upward revisions than downward adjustments recently.

Despite these positive forecasts, Airbnb stock has demonstrated underperformance compared to the broader S&P500 Index year-to-date, down 6.83% whilst the SP500 has added more than 15%. This discrepancy suggests that while operational fundamentals appear strong, the market's perception of Airbnb earnings and future growth trajectories continues to evolve.

The upcoming earnings report is expected to provide further clarity on the company's financial health, the impact of its strategic initiatives, and its outlook for the remainder of the fiscal year, and bulls will be looking for something from the firm that can shift the narrative.