Airbnb, the vacation home-rental company, has given a cautious forecast for Q2 revenue, causing a tumble in the company's shares. Despite a record-breaking Q1, the company expects growth to slow in Q2 due to rising prices and a murky economic outlook, which may affect consumer appetite for trips. Analysts had projected revenue of $2.4 billion, but Airbnb's forecast is for $2.35 billion to $2.45 billion. The company had benefited from the pandemic's shifts in work and lifestyle over the past few years. Still, as the post-Covid rush to travel loses steam, consumers are reining in leisure budgets amid persisting inflation and an unsteady economy.
Airbnb's shares fell by 10% to $114.25, with the company forecasting its slowest pace of growth yet. The forecast came after a record Q1, where revenue increased by 20% to $1.82 billion, Airbnb's highest ever for that period. The company's adjusted earnings before interest, taxes, depreciation and amortization were $262 million, better than Wall Street's estimates and also a record first quarter. The earnings per share were 18 cents, while analysts were expecting 17 cents.
Companies from airlines to hotels have been increasing prices as consumers have so far shown a willingness to pay. Personal consumption expenditures were up 3.7% in the first three months of this year, the most in almost two years. But people may be starting to draw the line. Bank failures, a rising rate of inflation, elevated mortgage payments, and a softening labor market, especially in high-income sectors such as tech, could see tourists start to pull back on spending.
Airbnb is taking steps to keep prices on rentals from exploding. The company rolled out more than 50 new features and upgrades in part to increase price transparency and affordability. To ensure the platform has places to stay at reasonable prices, the company launched Airbnb Rooms, where guests stay in homes with hosts and share common spaces like living rooms, kitchens, and backyards. Airbnb is also implementing a series of changes, including lower fees, adding the ability to pay in installments through a new partnership with Klarna Bank AB, and a new discount tool for hosts to offer the best deals.
Airbnb has been cautious with its Q2 forecast, expecting growth to slow as the post-Covid rush to travel loses steam. Nevertheless, the company has taken steps to keep prices affordable, such as launching Airbnb Rooms, lowering fees, and offering discounts. Despite the cautious forecast, Airbnb's Q1 was a record-breaking quarter, and the company has authorized a new share repurchase program of as much as $2.5 billion.
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