Analysts at Wedbush continue to see long-term growth potential for Airbnb Inc (NASDAQ:ABNB, ETR:6Z1) amid the emergence of negative travel data points and as the alternative accommodation provider issued a cautious outlook for the third quarter.
Shares of Airbnb tumbled almost 15% at $111 on Wednesday as its Q3 revenue guidance missed Street estimates and warned it was seeing some signs of slowing demand in the US.
The Wedbush analysts repeated their ‘Outperform’ rating on Airbnb but revised their price target to $135 from $165.
“With a shrinking booking window and near-term macro uncertainty, we think an acceleration is unlikely to materialize in the near-term, consistent with more recent commentary and outlooks from the broader travel industry,” the analysts wrote.
“We had expected accelerating room night growth in 2H supported by higher marketing spend, ongoing international expansion, continued health in mature markets, and easing year-over-year comps.”
The Wedbush analysts see several catalysts for Airbnb across a multi-quarter horizon.
“Despite softer near-term trends and uncertainty particularly in North America, we continue to see drivers of accelerating intermediate-term growth, including the ongoing mix shift to higher growth expansion markets, take rate expansion supported by monetization improvements and new host/guest services, and growth beyond the core with the upcoming relaunch of experiences,” they wrote in a note to clients.
In terms of take rate expansion, they noted Airbnb’s implantation of cross-currency fees at the end of the second quarter which they see driving 20 basis points of incremental take rate in the second half of 2024.
Other opportunities include the potential launch of sponsored listings, which the analysts forecast could add $400 million in high-margin revenue by 2026.
On non-core growth, they highlighted management’s plans to launch new products and services each year and the expected relaunch of the experiences product next year.
“The market for travel experiences is expected to reach $300 billion by 2025 globally, and only about 30% of the market is online,” they noted. “Airbnb will likely expand into other adjacent verticals, like car rentals, or complementary guest services, such as airport transportation, bag storage, and late checkout solutions.”