Airbnb Falls 7% in 6 Months: How Should You Approach the Stock?

Airbnb’s ABNB shares have lost 7.4% over the past six months, underperforming the Zacks Consumer Discretionary sector’s 16.4% return and the Zacks Leisure and Recreation Services industry’s 320.6% growth.

The underperformance can be attributed to increased volatility in travel demand caused by macroeconomic challenges, intensified competition and the seasonality in travel business.

However, Airbnb’s prospects are expected to benefit from consistent improvements in Nights and Experiences Booked, which are expected to boost Gross Booking Value (GBV).

So, will a rising GBV boost ABNB’s share price in 2025? Let’s dig deep.

ABNB’s Prospects Ride on Strong GBV

Third-quarter 2024 GBV was $20.1 billion, up 10% year over year. This growth was led by a combination of strong performance in Nights and Experiences Booked and a modest rise in Average Daily Rates (ADR).

Nights and Experiences Booked was 122.8 million, reflecting 8% year-over-year growth. This increase was attributed to strong performances across all regions, with particularly notable growth in Asia Pacific and Latin America, where demand recovery and expanding travel markets boosted bookings.

ADR was $164, representing a 1% year-over-year increase. Excluding the impact of forex, ADR rose 2%. This growth was supported by price appreciation and mix shifts, with rates being flat to up across all regions. 

Airbnb is focusing on making hosting as popular as traveling. With more than 8 million active listings, it saw growth across all regions and market types in the third quarter of 2024. 

To attract and retain hosts, Airbnb launched the Co-Host Network, allowing hosts to connect with experienced local co-hosts for personalized support in managing bookings, communicating with guests and setting up listings. With more than 10,000 co-hosts in 10 countries, the initiative aims to simplify hosting and drive supply growth.

Expanding Features to Boost ABNB Clientele

ABNB has introduced 535 plus new features and upgrades to enhance the platform for both hosts and guests. The 2024 Winter Release includes more than 50 upgrades aimed at improving guest experiences. These updates provide personalized features such as recommended destinations, suggested search filters and personalized listing highlights, making the app more tailored to individual preferences.

Airbnb is focusing on expanding its presence in markets outside of its core regions, targeting areas that remain under-penetrated. In the third quarter of 2024, the average growth rate of nights booked in these expansion markets was more than double of its core markets, indicating that the strategy is effective and driving strong demand in newer regions.

In the reported quarter, nights booked on Airbnb increased 18% year over year, with 58% of total nights booked through the app (up from 53% last year). There was also continued growth in first-time bookers, especially among younger travelers, showing strong demand from new users.

Macroeconomic Pressures & Rising Competition Impact Airbnb

Despite Airbnb's strong performance, it faces several macroeconomic challenges, such as inflation and fluctuating travel trends, which can impact demand. Intensifying competition in the travel sector and increased operating expenses are additional concerns. 

Airbnb operates in a highly competitive online travel booking market, facing strong rivals such as Booking Holdings BKNG, Expedia EXPE, Trip.com TCOM, MakeMyTrip and various regional agencies.

The company also faces stiff competition from online platforms offering experiences like Viator, GetYourGuide, Klook and Traveloka. Additionally, TripAdvisor, Trivago, Mafengwo and AllTheRooms.com serve as significant competitors, particularly in the listing and meta-search space.

Airbnb’s Zacks Rank

Currently, Airbnb carries a Zacks Rank #3 (Hold), which implies investors should wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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