🔥 Airbnb Stock Crashes: What It Means for STR Investors

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Hello STR Scout Members,

Airbnb's stock plummeted 14% after disappointing earnings. We're breaking down what this means for STR investors and sharing 17 new STR deals in 9 markets. Stay ahead with the latest in real estate and economic news, and global STR trends.

Thank you for being a valued subscriber of our STR investor community.

Cheers,

Andy Thoms

STR Scout

😎 STR home values are softening in multiple markets—be patient and always buy smart.

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Mountain Escape in Clyde, NC - Amazing STR

$475K | Clyde, NC: Charming 2BD, 2BA home, 1278 sqft, perfect for a mountain getaway.

• 2 bedrooms on the main level, plus an upstairs bonus room currently used as a bedroom.

• Recent Improvements! Nearly everything is under 4 years old.

• Elevation: 2966ft, offering breathtaking views and fresh mountain air.

• Average Host: $51k-$99k | Super Host: $99k-$118k

View Property Details
STR Agent: Tyler Coon
Text or Call: (828) 620-2541
Website

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FSBO | OFF-MARKET STR’s

$390K | Apollo Beach, FL: Turnkey 2BD, 2BA Airbnb with private pool. Strategic location near MacDill AFB, Tampa, and Sarasota. Proven rental income and top-performing STR. View Post

$395K | Gatlinburg, TN: 2BD, 2BA condo near downtown. Over $60K in renovations, modern design, new AC units, and strong rental history. Indoor pool and hot tub. View Post

$730K | Walland, TN: 3BD, 2.5BA, 2844 sqft home near Blackberry Mountain Resort. Offers mountain views, new HVAC, RV parking, and 3-car garage. No HOA. STR potential. View Post

$875K | Fairplay, CO: 3BD, 2BA turn-key property with stunning Mt. Silverheels views. Grossed $75K last year, projected $85K+ for 2024. Strong rental history, remote management. View Post

$1.8M | Cape Canaveral, FL: 4BD, 4BA vacation home, sleeps 14. Built in 2016, 2 blocks from beach, across from parks. Includes 6-passenger golf cart. Strong rental history. View Post

ACTIVE STR LISTINGS 

$245K | Front Royal, VA: 2BD, 1BA, 780 sqft home in Blue Mountain neighborhood. Cozy with gas log fireplace, hot tub, and lake access. Ideal as a vacation cabin. Close to Shenandoah NP. View Post

$285K | Pigeon Forge, TN: 1BD, 1BA turnkey condo near The Island. Sleeps 4, ideal for STR or vacation home. HOA covers maintenance, sewer, and more. Prime location in Colonial Crest. View Post

$490K | Indian Shores, FL: 1BD, 1BA condo with Old Florida charm. Ideal for Airbnb with no rental restrictions. Located between Clearwater Beach and St. Pete Beach. View Post

$599K | Lake Harmony, PA: 4BD, 2BA A-frame chalet in Split Rock Resort. Features a 900+ sqft deck, 12ft ceilings in family room, and prime location near amenities. Strong Airbnb potential. View Post

$680K | Oceano, CA: 2BD, 2BA, 933 sqft renovated bungalow near the beach. Features RV parking, outdoor shower, and potential for ADU. Located in an area issuing new STR permits. View Post

$899K | Sevierville, TN: 3BD, 4BA new construction in Wears Valley. Rental projections over $100K annually. Features a theater room, wet bar, and wraparound deck. View Post

$1M | Easley, SC: 5BD, 3.5BA lakefront home with private dock. Recently renovated with high-end appliances, solid flooring, and open plan. Olympic-sized tennis court. View Post

$1.125M | Naples, FL: 3BD + Den, 2BA fully renovated home on acreage with no HOA. 1905 sqft with vaulted ceilings, completed January 2024. Priced to sell quickly. View Post

$1.25M | Colfax, CA: 9BD, 2.5BA, 3586 sqft multi-zoned property on 1.3 acres. Versatile STR with zoning for retail, office, medical, and more. Development potential for duplexes. View Post

$1.3M | Sandy Springs, GA: 5BD, 4BA, 5328 sqft home near Dunwoody Country Club. Features two custom kitchens, luxury primary suite, income-generating terrace apartment, and expansive decks. View Post

$1.3M | Sevierville, TN: 3BD, 4BA, 3555 sqft luxury cabin on 2.83 acres. Built in 2023 with high-end furnishings, vaulted ceilings, bunk area, and strong rental potential. View Post

$1.4M | Lake Haven Resort, TN: 4BD, 5.5BA, 3490 sqft new construction cabin with Douglas Lake views. Features indoor pool, movie theater, game room, and 3 decks. Resort amenities include boat dock and hiking trails. View Post

Airbnb’s Stock Crashes | What It Means for STR Investors

In Airbnb’s second quarter 2024 earnings call, the company reported solid financial performance, but the results fell short of market expectations, leading to a 14% sell-off in its stock.

Revenue and Financial Performance

• Revenue Growth: Airbnb reported a revenue increase of 11% year-over-year, reaching $2.75 billion. However, this missed Wall Street’s expectation of $2.85 billion, indicating a shortfall in anticipated earnings.

• Net Income and Free Cash Flow: Net income was $555 million with a net income margin of 20%. The company generated $1 billion in free cash flow, showcasing strong financial health and operational efficiency. Despite this, the earnings per share (EPS) came in at $1.52, falling short of the expected $1.65.

Consumer Sentiment and Travel Trends

• Booking Patterns: There is a noticeable trend toward shorter booking lead times. While bookings for immediate and near-term stays remain strong, there is softness in bookings for long-term future dates, such as holidays.

• Increased Mobile App Usage: Bookings via Airbnb’s app increased by 19% year-over-year, now making up 55% of total nights booked. This shift towards mobile could enhance booking convenience and frequency.

Average Daily Rate (ADR) Trends

• ADR Appreciation: The company observed ADR growth, particularly in North America, driven by a mix shift towards more expensive and larger properties. This indicates a continued preference for higher-value stays, which can benefit investors with premium properties.

• Price Sensitivity: Despite some macroeconomic pressures, there has not been significant evidence of consumers trading down to cheaper properties. Larger and more expensive listings are still in demand, suggesting a resilient market for higher-end rentals.

Occupancy Trends

• Occupancy Variability: There is strong occupancy for short-term and immediate bookings, but some softness in long-term bookings. Investors should be aware of this trend when planning for seasonal or event-based demand fluctuations.

Supply Growth and Quality

• Active Listings: Airbnb surpassed 8 million active listings, with a 37% increase in active listings in Paris alone, demonstrating robust supply growth.

• Quality Improvement: Over 200,000 low-quality listings were removed to enhance the overall guest experience. This focus on quality can lead to higher guest satisfaction and repeat bookings.

Other Travel Industry Highlights

• Event-Driven Demand: Major events like the Olympics and EuroCup have significantly boosted bookings in cities like Paris and various locations in Germany. This underscores the importance of strategic event-based marketing for maximizing occupancy and rates.

• International Expansion: Airbnb is seeing strong growth in under-penetrated markets such as Latin America and Asia-Pacific, indicating new opportunities for investors to diversify geographically.

Airbnb Stock Performance and Sell-Off Reasons

Despite the positive earnings report, Airbnb’s stock experienced a significant sell-off (14% drop) following the announcement. Here’s why:

• Earnings Miss: Airbnb missed its earnings expectations. The reported revenue of $2.75 billion fell short of the expected $2.85 billion, and the EPS of $1.52 missed the expected $1.65. This earnings miss disappointed investors, leading to a negative market reaction.

• Guidance Concerns: Investors were disappointed with Airbnb’s guidance for the third quarter, which highlighted concerns over shorter booking lead times and potential slowing demand from U.S. guests. This cautious outlook created uncertainty about the company’s near-term growth prospects.

• Macro-Economic Pressures: There are broader macroeconomic pressures at play, including fears of a potential recession, rising interest rates, and inflation. These factors can impact consumer spending on travel and lodging, leading to investor apprehension about the future performance of travel-related stocks.

• Regulatory Challenges: New regulations in key markets, such as California’s new total price display and cancellation grace period rules, have created headwinds. These regulatory changes can impact booking patterns and revenues, adding to investor concerns.

• Valuation Pressures: Given Airbnb’s strong performance and high valuation, some investors may have decided to take profits, leading to a sell-off. High valuations often result in more significant stock price fluctuations based on perceived future growth risks.

Wrapping It Up

Airbnb’s Q2 2024 projected steady revenue growth and strong international performance. However, they also warned about headwinds like longer booking lead times, economic pressures, and a moderation in year-over-year growth in the key “Nights and Experiences” category.

Demand is steady for now, particularly for premium properties, but investors should stay vigilant and consider diversifying, including internationally.

Despite a recent stock dip, the core STR business remains stable, offering potential long-term opportunities for those who buy wisely and focus on optimizing revenue.

Source: Airbnb Quarterly Results

TRENDING NEWS NUGGETS

🚀 Airbnb’s Big Pivot: CEO Brian Chesky revealed plans to expand beyond short-term rentals by introducing co-hosting, relaunching "experiences," and adding new guest services. These changes could boost profitability by diversifying offerings and attracting more bookings.

😬 Airbnb’s Rough Summer: Despite surging travel, Airbnb’s stock tumbled 16% as it grapples with poor listings, high fees, city crackdowns, and costly marketing efforts. Investors might start questioning the platform's profitability amid rising competition and regulatory hurdles.

🏘️ Biggest Home Price Drop in 2 Years: As mortgage rates stay high, July saw 18.9% of listings slash prices, with Sun Belt cities leading the trend. This cooling market offers short-term rental investors a prime opportunity to acquire properties at reduced prices.

🏚️ Austin's Housing Market Tumbles: Home prices in the once-booming city have plunged over 30% due to an oversupply of new builds and dwindling demand. For short-term rental investors, this distress signals a chance to snag deeply discounted properties in a rapidly shifting market.

💼 Jamie Dimon Warns of Recession: JPMorgan Chase CEO still sees a 60-65% chance of a recession, citing uncertainty in geopolitics, housing, and Federal Reserve policies. Investors should brace for potential economic turbulence while hoping for a soft landing.

💸 Mexican Peso Hits 2-Year Low: The devaluation of the peso presents a prime opportunity for global travel advisors to plan cost-effective trips to Mexico. With enhanced purchasing power, tourists can now enjoy luxury hotels, dining, and attractions at more affordable rates. Time to put Mexico on your STR lifestyle investment radar!

🌐 🇲🇪 Montenegro | STR’s Best Kept Secret: Montenegro, with its stunning coastlines, low cost of living, and welcoming residency policies, is a hidden gem in Europe where we are actively scouting for cashflowing pied-a-terre’s. Investing in real estate here offers not just a beautiful low-cost lifestyle but also potential EU access as the country is on track to join soon. Stay tuned!