Airbnb (ABNB) stock is one of the worst S&P 500 stocks Friday after the travel booking and rental platform reported mixed results for its third quarter and provided a soft outlook for its fourth quarter.
In the three months ended September 30, Airbnb's revenue increased 9.9% year over year to $3.73 billion, boosted by an 8.5% jump in nights and experiences booked to 122.8 million. Its earnings per share (EPS), meanwhile, was down nearly 68% from the year-ago period to $2.13. The sharp decline in earnings per share was mostly the result of a tax benefit recorded in the third quarter of 2023.
"Airbnb had a strong Q3. Nights and Experiences Booked accelerated throughout the quarter and into Q4, despite a softer start due to shorter booking lead times compared to 2023," the company said in a statement. "We generated $1.1 billion of free cash flow during Q3 and $4.1 billion of free cash flow over the trailing twelve months, highlighting the strength of our cash-generating business model."
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The results were mixed compared to analysts' expectations. Wall Street was anticipating revenue of $3.72 billion and earnings of $2.14 per share, according to CNBC.
For the fourth quarter, Airbnb said it expects to achieve revenue in the range of $2.39 billion to $2.44 billion. The midpoint of this outlook, $2.415 billion, came up just shy of the $2.42 billion in revenue analysts are calling for.
Is Airbnb stock a buy, sell or hold?
Airbnb has lagged the broader market in 2024 and is currently up 10.5% for the year to date vs the S&P 500's 37% return. And Wall Street is on the sidelines when it comes to the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for ABNB stock is $132.04, representing a slight discount to current levels. Meanwhile, the consensus recommendation is Hold.
Financial services firm Oppenheimer is one of those with a Perform rating (equivalent to a Hold) on the large-cap stock.
"On the positive side, we see ABNB as the best-positioned travel company based on its strong global brand (limited Google risk) and ability to quickly adjust to travelers' demands through the combination of unique-supply and flexible terms," says Oppenheimer analyst Jed Kelly.
The analyst adds that the "work from anywhere" trends are likely to endure, which will provide strong tailwinds for ABNB to penetrate its massive total addressable market.
However, "investors appear to be baking in strong execution, and we see a high degree of multiple compression risk into uncertain macro with decelerating nights," Kelly warns.
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