Airbnb Stock Drops. Why Wall Street Is Cautious About Its Experiences Relaunch.

Airbnb revenue grew 13% in the second quarter.

Airbnb stock slid Thursday after the short-term rental platform warned investment will weigh on its margins. Analysts are still waiting to see evidence that a renewed expansion into travel experiences will pay off.

Airbnb was down 6.9% at $121.46 in morning trading. While its second-quarter earnings report on Wednesday beat expectations, the company said its earnings margin will be lower in the second half of the year due to its investment in new product categories.

The company is spending $200 million on the launch of what it calls Services and Experiences, as well as a redesigned app, with the goal of turning Airbnb into a one-stop shop for travel needs. It’s a second attempt at broadening its product, after a failed Experiences push in 2016.

“With no visibility into (1) new products (how quickly the offering can scale & level of investment beyond 2025) and (2) 2026 margins, we see limited multiple expansion opportunity,” wrote Robert Mollins, an analyst at Gordon Haskett, in a research note.

Haskett kept a Hold rating and $129 target price on Airbnb stock. He noted the company should be able to maintain an earnings margin above the 34.5% floor it guided for in 2025—down from 36% in 2024—but growth in North America continues to lag behind other regions.

If the Services and Experiences launch works, it could guarantee growth—even as Airbnb contends with a backlash in markets where it is blamed for contributing to so-called “overtourism” and faces restrictions on its expansion.

Regulation in New York on short-term rentals introduced in 2023 took almost 19,000 listings off the market. Barcelona’s mayor plans to eliminate the city’s around 10,000 short-term tourist apartments by the end of 2028, while San Francisco and Paris have limited how many days properties can be rented out. Airbnb has said such blanket regulations have failed to address local challenges.

Airbnb forecast revenue of $4.02 billion to $4.1 billion for the current quarter, representing year-over-year growth of 8% to 10%. Analysts polled by FactSet predicted around $4.05 billion. The company’s second-quarter revenue grew 13% to $3.1 billion.

“[Airbnb] shares now trade for a significant premium to the online travel group, and we think this multiple may be hard to retain in a difficult operating environment. We will be monitoring closely for changes in demand through the rest of the year,” wrote Wedbush analyst Scott Devitt in a research note.

Devitt kept a Neutral rating on the stock and lowered his target price to $130 from $135.

Write to Adam Clark at adam.clark@barrons.com