Published - November 2, 2022 @ 12:30 PM (EET)

‍

On Tuesday, Airbnb (NASDAQ:ABNB) shares fell after the company gave a fourth-quarter revenue forecast below market estimates, suggesting that consumer preferences are moving away from higher-cost rentals and back to urban and cross-border destinations.

While the industry has seen a stellar recovery this year following nearly three years of pandemic-related restrictions, it now faces risks from the global surge in inflation.

WHAT HAPPENED

The vacation rental firm said it expects fourth-quarter revenue of between $1.80 billion and $1.88 billion, with the lower end of this projection Wall Street's estimate of $1.86 billion.

Elsewhere, the San Francisco-based Airbnb recorded its highest-ever third-quarter bookings, with 99.7 million nights and experiences booked in the three months that ended in September.

The company said it is "well-positioned for the road ahead," despite facing several macroeconomic headwinds, including a strengthening US dollar which knocked 7% off of Airbnb revenue and erased 15% of net income during the quarter.

METRICS DETAILS

As hybrid work fueled demand for its long-term vacation rentals, the average daily rates for Airbnb climbed 5% year-over-year to $156 in the quarter, encouraged by hosts to charge more.

Revenue jumped 29% to $2.88 billion in the third quarter, and the company earned $1.2 billion in net income, topping analysts' estimates.

The company also demonstrated operating leverage since its adjusted EBITDA margin expanded from 49% to 51%.  As a result, adjusted EBITDA grew to $1.46 billion from $1.1 billion in the comparable period.

But rising prices could scare off travelers, with some hosts already seeing a pullback in bookings for the rest of the year.  

In addition, Airbnb could start facing renewed competition with hotels having expressed optimism about their businesses, contending there's an increase in demand for their services.

NOW WHAT

Citing a backlog of future bookings and coming bookings falling through with less frequency, Airbnb said it expects revenue growth to continue.

In a letter to shareholders, the company said, 

"As the impact of the pandemic recedes, but macro conditions persist, we expect a continued, albeit choppy, recovery of cross-border travel to be a further tailwind to future results."

Shares in Airbnb fell over 4% in after-hours trading Tuesday.