BUSINESS
When was the last time Airbnb fell this much in the stock market and what is the historical low?
The holiday home stock experienced a ateep drop, marking one of its biggest percentage drops since going public.
A failure to match Wall Street revenue estimates sent Airbnb’s value into a steep drop on Tuesday, falling 12% in after-hours trading following the earnings announcement and a lower than expected second-quarter profit.
By Wednesday morning it had fallen further, reaching a 16.6% drop at 113.25 points. However, this is not yet close to its lowest market value of 83.49 back in December 2022.
The disappointing earnings report revealed that Airbnb is facing challenges in maintaining its growth trajectory, particularly in the U.S. market. The company warned of slowing demand from American consumers, which has raised concerns among investors about the sustainability of its business model in the current economic climate. This slowdown is part of a broader trend affecting the travel industry, as economic uncertainties lead consumers to be more cautious with their spending.
Changing patterns of consumption amidst a wobbly economy
One of the key issues highlighted in Airbnb’s report is the shift in consumer behavior towards shorter booking windows. This trend suggests that travelers are increasingly making last-minute plans, likely due to economic pressures such as inflation.
These factors contribute to a more conservative approach to spending, impacting the travel sector’s overall growth.
Are hotels making a resurgence against Airbnb in Europe?
Of concern for the company will be a hardening of attitudes in Europe, one of the main destinations for U.S. travelers, against what are essentially short-term rental properties. In one example, the Spanish city of Barcelona recently announced it would no longer be accepting applications for new Airbnb properties in the city. 980,000 American tourists visited the city in 2023.
Airbnb properties are also no longer the cheapest options for many tourists visiting Europe. According to an analysis from Deluxe Holiday Homes, found that desirable cities such as Berlin, Rome, Amsterdam, and Dublin are in many cases cheaper to book a hotel room rather than an Airbnb.