Airbnb (NASDAQ:ABNB) will release its Q2 financials on Thursday, August 3. While the pent-up travel demand will support the revenues and earnings of this online platform offering short and long-term stays, the tough year-over-year comparisons could pose challenges and hurt the overall growth rate.
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During the Q1 conference call, the company’s management highlighted that a strong summer travel season would support its financials. Conversely, the Nights and Experiences Booked on its platform are experiencing unfavorable year-over-year comparisons as it overlaps the significantly high 2022 demand environment.
Furthermore, the average daily rate, or ADR, is expected to trend slightly lower in Q2, reflecting the negative impact of the mix shifts and the launch of the new Host pricing tools.
Against this backdrop, let’s delve into analysts’ estimates for Q2.
Here’s What Consensus Estimates Indicate
Wall Street expects Airbnb to report sales of $2.42 billion in Q2, up about 15% year-over-year. Further, it is near the higher end of the management’s guidance range of $2.35 billion to $2.45 billion. Alternatively, the consensus estimate indicates a further moderation in the growth rate.
For instance, ABNB’s revenues increased by 20% year-over-year in the first quarter of 2023. Moreover, its sales improved by 24% in Q4 2022. While Nights and Experiences Booked on its platform is expected to increase, tough comparisons and lower ADR will likely remain a drag.
Though Airbnb’s sales growth rate could moderate a bit, analysts expect the company to deliver solid EPS growth. Wall Street expects Airbnb to post earnings of $0.80 a share in Q2, up nearly 43% year-over-year, due to the improvement in cost structure. Its EPS is also projected to increase on a quarter-over-quarter basis.
Valuation Could Cap Upside Potential
ABNB is expected to benefit from solid travel demand. However, its share price has appreciated by over 79% on a year-to-date basis, making it expensive on the valuation front. James Lee of Mizuho Securities reiterated his Hold recommendation on ABNB stock on July 31.
The positive travel data, resilient consumer spending, and moderating inflation provide a favorable operating environment for travel-related companies, noted Lee. According to the analyst, Airbnb is well-positioned to capitalize on solid travel demand. Even so, the analyst believes that the positives are already priced into earnings, given ABNB’s premium valuation multiple compared to its peers.
Is Airbnb Stock a Buy, Sell, or Hold?
With 13 Buy, 16 Hold, and three Sell recommendations, Airbnb stock has a Moderate Buy consensus rating. At the same time, analysts’ average price target of $133.48 implies 12.29% downside potential from current levels.
Options Activity Highlights 7.72% Earnings-Related Move
While analysts are cautiously optimistic about ABNB stock, option traders are pricing in a 7.72% move on earnings, which is smaller than the previous quarter’s earnings-related move of 10.92% but greater than the average 1.66% move in the last eight quarters.
Learn more about TipRanks’ option tool here.
