Airbnb's Q3 2024 Earnings Preview

Airbnb (NASDAQ: ABNB) is set to release its third-quarter 2024 earnings report on November 7, with projected revenue between $3.67 billion and $3.73 billion.

This range suggests year-over-year growth of 8% to 10%. Analysts' estimates currently land near the higher end, at $3.72 billion, reflecting a growth rate of 9.6%. Consensus for earnings stands at $2.17 per share, marking a slight decrease of around 9% compared to last year's quarter.

Airbnb has a solid track record of beating analyst expectations, with three out of four quarters showing a positive surprise, averaging 25%.

Key Drivers for Q3 Earnings:

Airbnb’s core business model of connecting hosts and guests worldwide remains a primary driver. The company’s strategic moves to diversify its offerings and broaden its footprint globally have contributed to its consistent performance. With a portfolio of over 7.7 million listings across over 100,000 cities, Airbnb is well-positioned in urban and non-urban areas, appealing to a broad user base.

The platform's strength in non-urban locations, combined with the demand for urban and cross-border travel, has likely supported its growth in "Nights and Experiences Booked." It is nticipated that the company will report around 126 million nights booked for Q3, a nearly 10% increase from last year. This uptick in bookings points to sustained interest in Airbnb’s model, especially as travelers seek flexible, diverse lodging options.

Product Enhancements Bolster Engagement

Airbnb’s commitment to enhancing its platform through new features is another positive factor for Q3 results. One recent addition is "Guest Favorites," showcasing the highest-rated and most reliable properties, helping guests choose top-rated stays easily.

Another feature includes badges for highly-rated listings, which highlight the top 25% and top 1% properties, aiming to help users make informed choices when booking. These user-centric improvements are expected to have boosted the company’s Gross Booking Value (GBV) in the third quarter. Analysts project a GBV of $21.3 billion, representing an 11.5% increase from the previous year.

In addition, Airbnb’s efforts to grow its host community remain strong. The company is increasing its support for various host types, encouraging more property owners to list on the platform, and enhancing overall stay quality. By simplifying the process for new hosts, Airbnb is working to attract more listings and maintain high service standards for guests.

Competitive Landscape and Stock Performance

Despite these initiatives, Airbnb's stock performance has lagged behind key competitors. Over the past period, its shares returned just 0.2%, underperforming the broader consumer discretionary sector, which grew by 5.3%, and the leisure industry, which saw an 11.4% gain.

In contrast, shares of Booking Holdings (NASDAQ:BKNG) and Expedia (NASDAQ: EXPE) have outpaced Airbnb, with returns of 33.8% and 5%, respectively, while TripAdvisor (NASDAQ: TRIP) declined by 25%.

Investors may see Airbnb’s slow stock movement as a concern, particularly as it invests heavily in international markets and less mature regions to unlock growth potential.

Airbnb’s ongoing investments and strategic global expansion, however, could enhance its competitive standing in the long run. With over 430 platform improvements this year alone, Airbnb is building a more reliable and accessible service for its users, positioning itself to take on industry giants. As the company strengthens its product offerings and expands internationally, these moves may serve as future growth catalysts, even if current stock performance remains moderate.