Federal Reserve: Things are getting tough for Airbnb. Is everything OK at the vacation rental giant?

After a collapse last week and a slight price recovery, U.S. stock markets have now seen another decline. Airbnb Inc. reported disappointing prospects and weak demand, and its shares plunged on Wednesday. According to the Daily Mail, Airbnb shares fell 14% after the company reported an 8.7% increase in bookings in the second quarter, which was much less than previously forecast. Co-founder and CEO Brian Chesky said the company will now “target shorter booking lead times globally as there are signs of slowing demand from U.S. guests.” In an address to shareholders, he said the outlook for the third quarter of the current fiscal year would take these recent trends into account.

Airbnb CEO: Normality could return in 2024

Chesky expressed hope that things will return to normal in 2024. However, many other industry representatives fear a further decline in travel times due to the current economic crisis. Marriott International, Delta Airlines and Kayak parent Booking Holdings Inc. also expressed concerns that there could be further declines in the next quarter. He went on to say that while Latin America and Asia-Pacific remain the fastest-growing regions, there are “shorter booking lead times globally and some signs of slowing demand from U.S. guests.”

Lower sales hit Airbnb

Airbnb reported earnings per share (EPS) of $0.86, $0.06 less than the average estimate, even as revenue rose 10.6% to $2.75 billion. Revenue for the current quarter is expected to be between $3.67 billion and $3.73 billion.

The decline in Airbnb shares can be seen in the fact that the company on Tuesday lowered its revenue expectations for the next three months from $3.73 billion to $3.67 billion.

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Is the US economy in crisis?

Airbnb is symbolic of the currently stagnant US economy, which could slide into recession if drastic measures are not taken in time. The Federal Reserve is aware of the crisis and has announced an imminent interest rate cut. It has hinted at a cut in bank rates before September and expressed concern about the sudden rise in unemployment. In addition, the latest employment report showed that the labor market is weakening. It comes at a time when consumer spending is stagnating. Another cause for concern is the 10-year bond yield, which hit 3.7% on Monday. German yields fell to their lowest in seven months as speculation mounted that the European Central Bank could follow the Fed’s lead and announce even deeper rate cuts.

FAQ

Why did Airbnb stock prices fall on Wednesday?
Airbnb shares fell 14% on Wednesday after the company reported an 8.7% increase in bookings in the second quarter, well below what it had initially expected. Co-founder and CEO Brian Chesky said the company will now “target shorter booking lead times globally as there are signs of slowing demand from U.S. guests.”How could Airbnb’s revenue decline?
The decline in Airbnb shares can be seen in the fact that the company on Tuesday lowered its revenue expectations for the next three months from $3.73 billion to $3.67 billion.