By Dean Seal

Airbnb's stock trades at a premium relative to its online travel peers, but it might be hard to keep that lead as economic uncertainty slows travel demand in the U.S., analysts said.

The household name for short-term rentals said Thursday that bookings growth is expected to moderate in the current quarter, citing global economic volatility that is keeping consumers cautious with their travel plans.

The guidance tracks with other reported trends and industry commentary suggesting a broader slowdown in travel, particularly in the North America market that Airbnb has been emphasizing, UBS analysts said in a research note.

While the company is still a strong long-term play, now seems like a reasonable time for investors to back away from the online-travel sector, Wedbush analysts Scott Devitt and Matthew Weiss said Friday as they downgraded Airbnb's stock to a "neutral" rating.

"Airbnb trades at a premium multiple that may be difficult to retain during a more difficult operating environment," the Wedbush analysts said.

Wedbush joins several other analyst firms with "neutral" ratings on the stock that believe Airbnb is well positioned to navigate any upcoming turbulence, but will still feel some heat as certain travel dynamics shift.

The company on Thursday reported that booking behavior is broadly consistent, though there has been some softness in the U.S. market for bookings that are more than one month out, as well as foreign inbound travel.

Those trends could translate to U.S. consumers trading down to more local and regional travel, demand that Airbnb is well suited to meet for "as long as people continue to travel," Citizens analysts said in a research note.

And because foreign travel into the U.S. is only about 2% to 3% of Airbnb's overall business, the company should be able to ride out any weakness there, Cantor analysts said in a research note.

The slowdown also doesn't seem to be affecting high-end U.S. travelers, who are showing no signs of trading down in their bookings or shortening their trips, Oppenheimer analysts said in a research note.

Still, Airbnb isn't immune to the macroeconomic volatility and could face greater headwinds if concerns about the economy don't abate, analysts said. Travel demand in the third quarter is already tracking lower than second-quarter levels, Truist analysts said in a research note, citing their own industry intelligence and research.

"We struggle with being able to recommend the stock given decelerating demand trends for the U.S. combined with materially higher valuation in comparison to other high quality companies in the lodging space," the Truist analysts said.

Airbnb's shares are down about 5% year-to-date, a milder decline than those of its competitors Expedia Group and Trip.com Group. All three stocks were up 1% to 2% on Friday.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

May 02, 2025 13:11 ET (17:11 GMT)

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