What's Happening With Airbnb Stock?

Airbnb (NASDAQ: ABNB) has decreased by approximately 11% over the past month—despite having an impressive Q2. Revenue increased by 13% year-over-year to $3.1 billion, surpassing the $3.03 billion consensus, with an EPS of $1.03 exceeding expectations of $0.94. User engagement reached record levels. So what caused the decline? Investors are looking beyond the positive results: management cautioned about slower growth and reduced margins in the latter half of 2025, even while pursuing ambitious—and costly—expansion initiatives.

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What’s Driving Investor Nerves

Airbnb is investing $200 million to support its next growth phase; updating its app with AI-driven personalization, broadening into “Services & Experiences,” and hosting high-profile celebrity events. These ventures could enhance user engagement and diversify revenue, but they will require time to scale and might impact profitability. Simultaneously, tightening short-term rental regulations in major cities like New York, San Francisco, and Paris are compelling Airbnb to concentrate growth in smaller, regulation-friendly markets. The benefits of this shift remain uncertain.

Valuation: Premium, But Not Excessive

Airbnb trades at a premium compared to the S&P 500 but still positions itself between its two largest competitors. Its ratios of 6.6x price-to-sales, 29.3x price-to-earnings, and 17.0x price-to-free-cash-flow exceed the index’s 3.0x, 22.5x, and 20.4x. However, it remains less expensive than Booking Holdings (NASDAQ: BKNG) (7.3x sales, 37.7x earnings) while maintaining a significantly higher valuation than Expedia (NASDAQ: EXPE) (1.7x sales, 22.1x earnings)—a valuation that reflects confidence in stable growth, without presuming a significant surge.

This confidence is supported by Airbnb’s Revenue performance. The company has demonstrated a three-year average growth rate of 20%, significantly outpacing the S&P 500’s 5.2%. Over the last year alone, sales increased by 10% to approximately $12 billion, more than double the market’s 4.5% increase.

Bottom Line

The recent decline in the stock is more a readjustment of expectations than a sign of trouble. Airbnb continues to be a premium brand with robust growth and a sustainable platform advantage. The question for investors is whether they are prepared to endure a slower short-term increase in return for a potentially more powerful long-term growth path.

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