What happened
Airbnb (ABNB -0.49%) stock trailed the market this week, falling 12% through Thursday trading. That's compared to a 0.1% drop in the wider market, according to data provided by S&P Global Market Intelligence. The decline didn't erase much of shareholders' recent positive returns, though. Airbnb stock is still up nearly 30% so far in 2023.
This week's slump was powered by concerns about the real estate rental giant's growth prospects.
So what
The main pressure on the stock came following a short report that raised several issues questioning Airbnb's competitive position. The report highlighted a few guest complaints about awful rental experiences to argue that people may be losing enthusiasm for the travel booking platform.
At the same time, Airbnb could face demand pressure as professional property managers shift bookings off its platform and onto their own platforms. In effect, Airbnb may soon struggle to compete against many of its largest hosts, the short report argues.
Now what
There is no sign of collapsing demand in Airbnb's latest operating results. In fact, management said in mid-February that booking trends looked strong into early 2023 after revenue soared by 46% last year. The supply of listings expanded, too, rising 16% in 2022 to 6.6 million homes and rooms.
Yet rental prices have raced too high in some places. And Airbnb is always working to boost rental supply. The company is currently working to reduce prices through new discounting tools and to add more transparency around prices so that guests aren't surprised by unexpected charges. "We expect these changes will drive greater affordability and value for our guests," management told investors in February.
Investors will get an update on these initiatives when Airbnb announces its Q1 results in a few weeks. That report is expected to show sales of around $1.8 billion, translating into growth of nearly 20%. Solid demand gains like that would suggest many guests and hosts are finding value in the travel platform.
