Airbnb Stock Underperforms Amid Q1 Earnings Drop and Q2 Guidance Cuts

Airbnb has underperformed the broader market over the past 52 weeks, with a 3.7% return compared to the S&P 500 Index's 21.5% rally. Despite Q1 2025 adjusted EPS dropping 41%, shares rose 1% the next day, driven by a 6% revenue increase to $2.3 billion. Analysts expect a 2.2% YoY growth in adjusted EPS to $4.20 for the fiscal year ending in December 2025. The consensus rating is a "Hold" based on 11 "Strong Buy" ratings, one "Moderate Buy," 21 "Holds," two "Moderate Sells," and five "Strong Sells."

Airbnb (ABNB) has shown mixed performance over the past year, underperforming the broader market. Despite a 3.7% return, the company has experienced a 41% drop in Q1 2025 adjusted EPS, but shares rose 1% the next day, driven by a 6% revenue increase to $2.3 billion. Analysts expect a 2.2% YoY growth in adjusted EPS to $4.20 for the fiscal year ending in December 2025. The consensus rating is a "Hold" based on 11 "Strong Buy" ratings, one "Moderate Buy," 21 "Holds," two "Moderate Sells," and five "Strong Sells" [1].

Despite the mixed performance, Airbnb's Q1 2025 results demonstrated resilience. The company reported an EPS of $0.24 versus the Street's expectation of $0.23. Revenue climbed 6% year-over-year to $2.27 billion, slightly above the $2.26 billion consensus estimate. Gross booking value rose 7% to $24.5 billion, supported by 143.1 million nights and experiences booked, up 8% from the year-ago period. However, the company issued a more muted Q2 revenue outlook, guiding for $2.99 billion to $3.05 billion, slightly under the $3.03 billion consensus at the midpoint. Airbnb reaffirmed its full-year adjusted EBITDA margin guidance of at least 34.5%, signaling confidence in its cost management and pricing power [1].

The company's stock has gained 9.2% since the May earnings release, underperforming the S&P 500’s 12% rise. So far this year, Airbnb is up just 4.13% versus the index’s 8.32% gain, suggesting plenty of room for a catch-up rally. The stock’s most recent price action indicates fairly strong bearish sentiment, which has pushed the stock lower for the past three days in a row [1].

Airbnb’s redesigned app, launched in May this year, introduces distinct tabs for Homes, Experiences, and Services, signaling the company’s ambition to become more than just a lodging marketplace. CEO Brian Chesky shared that Airbnb wants to emulate Amazon in the Services sector, dramatically expanding the company’s total addressable market. According to Chesky, the goal is to build a full-scale services platform where users can book not just homes, but also experiences, local services, and more. This initiative alone could eventually drive an incremental $10 billion in annual bookings [1].

Airbnb’s valuation is high, with a trailing 12-month P/E ratio of 35.8 compared to a sector median of just 19.6. However, this premium is justified by the company’s midterm revenue growth potential and expanding margins. Consensus projects around 9.5% midterm revenue growth, which is viewed as conservative given accelerating trends in its core markets and the Services vertical. My own valuation work suggests a fair value of $153.90, implying over 12% upside from current levels [1].

Analysts have been slowly raising their forecasts leading into next week’s performance figures: consensus EPS estimates have climbed from $0.88 to $0.94 since the last earnings report, reflecting growing optimism. I believe the company’s EBITDA margin guidance remains conservative and expect upside in both profitability and topline performance. Key catalysts include improving attach rates in Airbnb’s Experiences and Services segments, as well as a broader rebound in global travel [1].

Airbnb is not just another travel stock. It is evolving into a powerful digital services platform, with high margins, ample cash flow, and a visionary CEO charting bold new territory. With profitability gaining strength, vertical expansion underway, and a potentially transformative strategy shift in motion, Airbnb is positioned for acceleration in the coming quarters. For investors seeking growth in a dynamic, post-pandemic travel-tech landscape, Airbnb may be worth buying in advance of next week’s earnings news [1].

References:
[1] https://www.tipranks.com/news/why-airbnb-abnb-is-a-hot-buy-ahead-of-next-weeks-earnings