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Airbnb Falls 5% in a Year: Should You Buy, Sell or Hold the Stock?

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Airbnb’s (ABNB - Free Report) shares have lost 4.8% in the trailing 12 months, underperforming the Zacks Consumer Discretionary sector’s 11.5% return and the Zacks Leisure and Recreation Services industry’s appreciation of 22.7%.    

The underperformance can be attributed to heightened volatility in travel demand, driven by macroeconomic challenges. Intensified competition from rivals with enhanced offerings and the seasonal nature of the travel industry, which relies heavily on peak periods, remain key concerns.

Airbnb Struggles Amid Economic & Competitive Pressures

ABNB operates in a highly competitive online travel booking market, facing strong competition from well-established players like Booking Holdings (BKNG - Free Report) , Expedia (EXPE - Free Report) and MakeMyTrip (MMYT - Free Report) . 

Beyond traditional booking sites, Airbnb also competes with online platforms like Viator, GetYourGuide, Klook and Traveloka, which focus on experiences. These companies pose a significant challenge by diversifying travel options and attracting a broader customer base.

Airbnb, Inc. Price and Consensus

 

Airbnb, Inc. Price and Consensus

Airbnb, Inc. price-consensus-chart | Airbnb, Inc. Quote

Airbnb competes with platforms like TripAdvisor, Trivago, Mafengwo and AllTheRooms.com in the meta-search and listing space. Additionally, Google is expanding its travel initiatives, posing a new threat by seeking to capture more travel-related searches and bookings.

Airbnb is affected by global economic factors such as inflation, geopolitical uncertainty and concerns about a potential economic downturn, which affect consumer spending on travel.

Margin Compression Implies Near-Term Weakness

Airbnb anticipates a margin compression in the fourth quarter, expecting margins of 27-28%, down from the previous quarters. This decline suggests near-term weakness in profitability, which could lead to some investor concerns about short-term performance.

ABNB’s Estimate Revision Shows Downward Trend

For the first quarter of 2025, the Zacks Consensus Estimate for earnings is pegged at 26 cents per share, down by a penny over the past 30 days. This indicates a year-over-year decline of 36.59%.

The Zacks Consensus Estimate for first-quarter 2025 revenues is pegged at $2.31 billion, suggesting a 7.98% year-over-year increase. However, it indicates a 4.9% sequential decline from the fourth-quarter 2024 estimate of $2.43 billion.

ABNB has a mixed earnings surprise history. The company’s earnings missed the Zacks Consensus Estimate in two of the trailing four quarters and beat the other two, resulting in an average surprise of 20.83%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

ABNB’s Zacks Rank

ABNB currently has a Zacks Rank #4 (Sell), which implies that investors should stay away from the stock for the time being. 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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