The recent surge in Airbnb stock prices may be short-lived, according to a report from KeyBanc. Analyst Justin Patterson downgraded shares of Airbnb (ticker: ABNB) to Sector Weight, citing concerns about the slowing demand in the travel industry.
After experiencing a 60% increase in 2023, Airbnb stock fell 3.1% on Tuesday, trading at $132.40. Patterson believes that the company’s growth has been fueled by pent-up travel demand and changing traveler behaviors post-pandemic. However, he cautions that these tailwinds are starting to lose steam.
Although Airbnb CEO Brian Chesky reported strong guest demand during the company’s second-quarter earnings call in August, Patterson points to the Federal Reserve’s Beige Book, which indicates that consumer spending on tourism is reaching the peak of pent-up demand from the pandemic era.
This moderation in travel demand poses a risk to Airbnb’s night and average daily rate (ADR) growth. In the second quarter, ADRs reached $166, showing a modest 1% increase compared to the previous year. Patterson believes that Airbnb’s prolonged period of ADR strength is likely due to delayed recoveries across regions and urban markets. However, he expects a reversion to be more likely than sustained growth.
It remains to be seen how Airbnb will navigate the changing landscape of the travel industry amidst fluctuating demand. Investors and analysts will be closely monitoring the company’s performance in the coming months.
