Shares of Airbnb plummeted in premarket trading in New York after the company reported disappointing second-quarter earnings, falling short of Wall Street's expectations, and issued a warning about slowing demand from US vacationers. This development comes amid rising recession risks in the US, with the consumer downturn worsening for the working poor and middle class due to elevated inflation and high interest rates. 

Airbnb warned that it is "seeing shorter booking lead times globally and some signs of slowing demand from US guests." 

Bookings increased 8.7% in the second quarter to 125.1 million, missing analysts' estimates of 126.33 million. Airbnb expects "sequential moderation" of booking growth in the third quarter. 

In a consumer downturn, vacation spending is some of the first discretionary spending households cut to preserve cash. The problem is, as we've already cited numerous Goldman notes, explaining low/mid-income consumers are under severe financial stress. Airbnb's earnings and dismal outlook are ominous signs that the consumer slowdown will likely worsen through the end of the year. 

Here's a snapshot of second-quarter earnings (courtesy of Bloomberg):

• Revenue $2.75 billion, +11% y/y, estimate $2.74 billion

• Gross booking value $21.2 billion, +11% y/y, estimate $21.23 billion

• Adjusted Ebitda $894 million, +9.2% y/y, estimate $862.3 million

• Adjusted Ebitda margin 33%, estimate 31.4%

• EPS 86c vs. 98c y/y

• Nights and experiences booked 125.1 million, +8.7% y/y, estimate 126.33 million

• Gross booking value per nights and experiences booked $169.53, +2.1% y/y, estimate $167.96

• Free cash flow $1.04 billion, +16% y/y, estimate $788 million

Third-quarter estimates reveal "sequential moderation" in booking growth, an indication of consumers pulling back: 

• Sees revenue $3.67 billion to $3.73 billion, estimate $3.84 billion (Bloomberg Consensus)

• Sees ADR up modestly Y/Y

• Sees Adj Ebitda similar to 3Q23 on a nominal basisSees Adj Ebitda margin down relative to 3Q23

Airbnb's shares plunged 15% in premarket trading early Wednesday. If the intraday declines exceed 16%, shares would record the largest-ever intraday decline.

RBC Capital Markets analysts led by Brad Erickson commented on Airbnb's outlook that it "will likely only further stoke the soft consumer thesis." 

Here's what other Wall Street analysts are saying about the earnings report (courtesy of Bloomberg):

Morgan Stanley (underweight)

• Airbnb's 3Q guidance for room night deceleration and higher marketing spend are important, analyst Brian Nowak says

• Nowak adds that it speaks "to the choppiness and slowing in overall macro travel demand" as well as the rising cost to forward the company's growth

• While Airbnb is a well-run company, Nowak says it is continuing to look similar to Booking Holdings, in terms of slowing room night growth, higher marketing spend and investment needed to grow

• PT cut to $115 from $130

Barclays (underweight)

• Consensus estimates are likely coming down due to the softer outlook and higher level of marketing in 2H, analyst Trevor Young writes

• "Normalization in travel demand, some relative val. premium coming out informed our UW, and that seems to be playing out"

• PT cut to $100 from $110

Baird (neutral)

• Analyst Colin Sebastian continues to view Airbnb as one of the best-managed and most compelling online marketplaces, but headwinds from current macro conditions challenge visibility

• That, along with possible margin contraction on incremental marketing investments, leads Sebastian to anticipate "choppy trading" until the short-term market stabilizes

• PT cut to $120 from $140

Evercore ISI (in line)

Bloomberg Intelligence

• "Airbnb's guidance for a further deceleration in room-night growth to around mid-single digits in 3Q, after missing 2Q consensus, suggests tapering demand with average daily rates unlikely to be a tailwind for the top line in 2H," analyst Mandeep Singh writes

Meanwhile, just last week, travel website Booking Holdings reported worse-than-expected guidance, pointing out a "mild moderation" across the European travel industry and consumers seeking lower-star hotels and shorter stays (mainly in the US). 

Airbnb's earnings report just confirms that the consumer downturn theme is gaining momentum.

It's only a matter of time before Goldman tells clients to start shorting stocks with exposure to upper-income folks. The bank's analysts have already told clients to short companies with low/mid-consumer exposure.