Airbnb shares plummeted 6% following the release of its Q2 2025 revenue forecast, which fell short of market expectations despite meeting Q1 earnings targets. The decline highlights growing concerns about slowing growth in the maturing short-term rental market.

The accommodation platform reported Q1 2025 revenue of $2.3 billion, representing a 6% year-over-year increase and slightly exceeding analyst projections. However, net income saw a significant decrease to $154 million from £264 million in Q1 2024, primarily due to increased stock-based compensation expenses.

Nights and Experiences Booked demonstrated modest growth, rising 8% year-over-year to 143.1 million, while Gross Booking Value reached £25 billion, marking a 7% increase. CEO Brian Chesky emphasised the company’s resilience, stating, “Our adaptable model continues to thrive as guests prioritise diverse, affordable stays worldwide.”

The company’s Q2 2025 revenue guidance, projected at $2.99–$3.05 billion, indicates 9-11% year-over-year growth, falling below Wall Street’s consensus of $3.04 billion. This conservative outlook stems from softening North American demand, particularly from Canadian travellers booking U.S. stays, and rising marketing costs, which increased 9.5% to $563 million.

Amidst these challenges, Airbnb is implementing strategic initiatives to diversify its offerings. The company has launched an AI customer service tool now handling 50% of U.S. queries and executed $797 million in stock buybacks. Additionally, their Guest Favourites programme, featuring curated listings, now comprises 20% of total inventory.

The platform’s operational upgrades extend to pricing transparency improvements and increased focus on Asia-Pacific and premium urban listings. A significant product announcement scheduled for May 13 signals Airbnb’s ambition to expand beyond traditional accommodation services.

While Airbnb maintains strong profitability with an Adjusted EBITDA margin of 18%, the company faces headwinds from stagnant average daily rates, which remain at approximately $171. The shift towards becoming a comprehensive travel platform reflects the broader evolution of the short-term rental sector, where growth increasingly depends on service diversification rather than mere listing expansion.

Industry analysts note that while festive season travel and international expansion opportunities present potential growth drivers, the company must navigate challenges including increased competition from traditional hotels and evolving market dynamics in the $10.9 trillion travel services sector.

News Source: CNBC