Down 17% in a year, is this S&P 500 giant in trouble?

As many fear a slowdown in the US economy, this S&P 500 company has disappointed in the market. But I think better times are ahead.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Airbnb (NASDAQ:ABNB), the revolutionary travel accommodation provider that disrupted the hospitality industry, has hit some turbulence in the last year or so. With its stock price down about 17% over the past year, many investors are wondering if this S&P 500 giant is facing serious challenges, or if it’s just experiencing temporary setbacks in a traditionally cyclical sector.

Latest earnings

The company’s recent second-quarter earnings report, released on 6 August 2024, has intensified these concerns. Following the announcement, the shares tumbled approximately 14%, reflecting the general disappointment with the performance and outlook.

Created with Highcharts 11.4.3Airbnb PriceZoom1M3M6MYTD1Y5Y10YALL1 Aug 201931 Aug 2024Zoom ▾Jan '20Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '242020202020212021202220222023202320242024www.fool.co.uk

So, what’s behind this downturn? Let’s dive into the details. Firstly, Q3 revenue guidance has raised eyebrows. The company’s projections suggest a slowdown in booking growth, particularly in the US. This has sparked worries about the firm’s ability to maintain its impressive revenue growth trajectory in the face of potentially reduced consumer spending on travel.

Should you invest £1,000 in Vaneck Ucits Etfs Plc - Vaneck Global Mining Ucits Etf right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Vaneck Ucits Etfs Plc - Vaneck Global Mining Ucits Etf made the list?

See the 6 stocks

Adding to these concerns, some analysts have pointed out the lack of a clear expansion strategy beyond its core business. Some have expressed reservations about the company’s ability to transition towards an AI-powered platform effectively, especially where competitors are aggressively building new systems.

Strong fundamentals

It’s not all doom and gloom, though. The financials still paint a picture of a robust company. With a market cap of $71.5bn and revenues of $10.51bn over the trailing 12 months, the firm remains a formidable player in the travel industry. The company’s profit margins are also still impressive, with a gross margin of 83% and a net profit margin of 46%.

I’m excited about the prospect of a steady recovery here. As uncertainty hits the sector, a discounted cash flow (DCF) calculation suggests the shares are about 53% below estimated fair value. I’m a long-term investor, and even if there are a few more bumps in the road, that’s a lot of potential if management can get things back on track.

In the near term, I’m a little concerned about how much insider selling I’m seeing. CEO Brian Chesky alone has sold over $17m of his shares in the last month. Of course this can be entirely unrelated to performance, but it’s not exactly inspiring for new investors.

One for my watchlist

So, is Airbnb in trouble? While the company faces challenges, including slowing growth and increased competition, I’d say it’s premature to sound the alarm bells. The S&P 500 firm’s strong balance sheet, coupled with its innovative structure and experienced management, suggests to me it has the resources to navigate these difficulties.

I’ll still be keeping a close eye on the company’s progress in executing its strategy, particularly in expanding beyond its core business and leveraging new technologies. The next few quarters will be crucial in determining whether this S&P 500 giant can regain its momentum or if it’s facing a more prolonged period of turbulence.

In the dynamic and lucrative world of travel and technology, I’d say Airbnb’s journey continues to be one worth watching, so I’ll be adding shares at the next opportunity.

Should you buy Vaneck Ucits Etfs Plc - Vaneck Global Mining Ucits Etf now?

Don’t make any big decisions yet.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — has revealed 5 Shares for the Future of Energy.

And he believes they could bring spectacular returns over the next decade.

Since the war in Ukraine, nations everywhere are scrambling for energy independence, he says. Meanwhile, they’re hellbent on achieving net zero emissions. No guarantees, but history shows...

When such enormous changes hit a big industry, informed investors can potentially get rich.

So, with his new report, Mark’s aiming to put more investors in this enviable position.

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Gordon Best has no position in any of the shares mentioned. The Motley Fool UK has recommended Airbnb. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Prediction: 12 months from now, £5,000 invested in Tesla stock could be worth…

Tesla stock has endured a miserable year so far, falling by 29%. Muhammad Cheema takes a look at how it…

Read more »

Investing Articles

See what £10,000 invested in Tesla shares at their mid-December peak is worth today 

As the world absorbs the full scale of Donald Trump's tariffs, Tesla shares are reeling. Investors who bought the stock…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Dividend Shares

2 ‘safe’ LSE dividend stocks to consider as global markets sell off

As global markets experience high levels of volatility due to economic uncertainty, investors are piling into these ‘safe-haven’ dividend stocks.

Read more »

Investing Articles

US stock market rout: an unmissable opportunity for investors?

His tech-heavy portfolio has been smashed by Trump’s tariffs. However, Dr James Fox believes there could be some opportunities in…

Read more »

Investing Articles

After a 13% ‘Trump tariff’ fall, is the Barclays share price too cheap to miss?

Does the Barclays share price fall mean we should all panic and run screaming from the stock market? Nah, of…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

2 investment trusts to consider for a Stocks and Shares ISA

These two investment trusts have a different focus -- but our writer sees both as worth considering, one more for…

Read more »

Investing Articles

Deutsche Bank reiterates Buy rating on 9.6% yielding FTSE 250 stock that was “most shorted in UK”

Our writer investigates why a major broker remains optimistic about a FTSE 250 stock that was once the most shorted…

Read more »

Investing Articles

2 things to remember when stock markets are turbulent

US trade policy has rattled the stock markets in New York, London and elsewhere. Our writer outlines a couple of…

Read more »