Airbnb
stock’s rally came as travel demand recovered, but the jump in demand won’t last, according to KeyBanc.
KeyBanc Capital Markets analyst Justin Patterson downgraded shares of
Airbnb
(ticker: ABNB) to Sector Weight from Overweight on Tuesday and removed his $160 price target on the stock.
Airbnb stock fell 3.1% Tuesday to $132.40.
“While the Company has been benefiting from pent-up travel demand and changing traveler behaviors postpandemic, we are cautious these tailwinds are slowing,” Patterson wrote in a research note.
The downgrade comes after shares of the short-term rental company have surged 60% in 2023. Travel demand jumped as people chose to go on vacations after largely being stuck at home during the pandemic.
Chief Executive Brian Chesky said on the company’s second-quarter earnings call in August that guest demand was still strong.
“Nights and Experiences Booked increased 11% in Q2 compared to a year ago,” he said at the time.
However, the latest Beige Book published in September, which is the Federal Reserve’s summary of current economic conditions, noted that while consumer spending on tourism was stronger than expected in July and August, it was considered the “last stage of pent-up demand for leisure travel from the pandemic era.”
Patterson wrote that the moderation of travel demand puts Airbnb’s night and average daily rate growth at risk. Average daily rates, or ADRs, were $166 in the second quarter, which represented a 1% increase from the year before.
“Airbnb has experienced a prolonged period of ADR strength, which we characterize as from delayed recoveries across regions and in urban markets. With consumer spend on services materially outpacing goods, we expect a reversion is more likely than not,” Patterson said.
Write to Angela Palumbo at [email protected]
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