What happened

While nearly the whole stock market was up today on lower-than-expected inflation, Vacasa (VCSA -0.50%) was a rare red dot on market screens after the vacation rental management company missed the mark in its third-quarter earnings report. Earnings were lower than expected, and its guidance indicated that momentum may be fading.

As of 1:02 p.m. ET, the stock was down 39.8%.

So what

Vacasa actually beat top-line estimates in the quarter, posting revenue of $412.2 million, up 25% from the previous year and ahead of the consensus at $391.7 million.

Gross booking value was also up 25%, to $969 million, driven by a 12% increase in nights sold to 2.1 million and a 12% increase in gross booking value per night to $471. 

However, Vacasa experienced higher-than-expected local market and customer support costs, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $46 million was below its forecast of $55 million to $60 million. Its earnings per share of $0.04 also missed the consensus at $0.07.

Now what

Vacasa didn't issue specific guidance, but in its letter to shareholders, the company said it was going to meaningfully reduce the capital it was spending on its "portfolio program," or the local vacation rental management companies that Vacasa owns.

Management also noted softness in the economy and said there was a chance that gross booking value per home could decline next year as consumers travel less or spend less on vacations, which could even lead to a decline in total revenue.

The company said it would manage expenses to deliver an adjusted EBITDA profit next year, but the warning on the top line from the travel stock clearly spooked the market.