BMO cuts Airbnb price target to $130, maintains market perform

On Wednesday, BMO Capital Markets adjusted its outlook on Airbnb Inc. (NASDAQ:ABNB), lowering the price target to $130 from the previous $151 while keeping a Market Perform rating on the stock. The revision reflects a mix of near-term challenges and market conditions impacting the online travel agency (OTA) space.

The firm cited several reasons for this adjustment, including a shorter booking window observed in July, which has led to a third-quarter outlook for Airbnb that fell below both BMO's and broader market expectations. Additionally, there is a noted lack of visibility into the fourth quarter of 2024, attributed partly to uncertainties surrounding consumer behavior.

Another factor influencing the revised price target is the increased sales and marketing expenditures Airbnb is facing. The company is accelerating its presence on social media, which carries higher costs and offers a less certain return on ad spend (ROAS) compared to traditional search engine optimization (SEO) strategies.

Despite these headwinds, BMO acknowledged that the overall sentiment in the OTA sector is becoming more neutral. This shift is somewhat balanced by the potential for mergers and acquisitions (M&A) to provide upside opportunities. The firm's commentary suggests a cautious but not wholly negative outlook for Airbnb as it navigates through a period of both sector-specific and macroeconomic uncertainties.

In other recent news, Airbnb Inc. faces a challenging period as it navigates a complex demand environment. RBC Capital and Citi have both downgraded the company's stock outlook, citing concerns over increasing marketing expenses amid slowing demand and a cautious Q3 outlook. Despite this, both firms maintain a neutral rating on the stock. Meanwhile, Benchmark maintains a Buy rating and a price target of $190, emphasizing Airbnb's potential to benefit from free media coverage and robust average daily rates.

Airbnb's Q2 performance exceeded estimates for Gross Bookings and EBITDA, however, the Q3 revenue is projected to fall short of expectations, ranging between $3.67 billion and $3.73 billion. Q2 profit decreased to $555 million or 86 cents per share, from $650 million or 98 cents per share last year. Despite these challenges, Airbnb reported an 11% increase in total revenue year-over-year, reaching $2.75 billion, and a similar rise in gross bookings value to $21.2 billion.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.