We came across a bearish thesis on Airbnb, Inc. (ABNB) on Wolf of Harcourt Street’s Substack. In this article, we will summarize the bears’ thesis on ABNB. Airbnb, Inc. (ABNB)’s share was trading at $137.29 as of 5th June. ABNB’s trailing and forward P/E were 34.85 and 31.45 respectively according to Yahoo Finance.
A family boarding an airplane with their suitcases, symbolic of the company’s reach into the global travel industry.
After years of promise and steady ownership since 2021, the investor exited their Airbnb position following a disappointing Q1 2025 and underwhelming product updates. Nights and Experiences Booked grew just 8%, the slowest rate since the pandemic, partly due to tough comps from last year’s Leap Day. Gross Booking Value rose 7% year-over-year to $24.5 billion, but this too marked a slowdown, even after adjusting for FX.
The Average Daily Rate dipped 1% (up 1% ex-FX), and the take rate softened slightly to 9.3%. Revenue increased just 6%, or 11% on a normalized basis, but momentum remained weak. Operating margin shrank from 5% to 2%, mainly due to elevated product development and marketing costs tied to the Summer Release. Net income also slipped to $154 million, buoyed by interest income, without which Airbnb would have been unprofitable. That said, free cash flow remained robust at $1.78 billion in Q1, reflecting Airbnb’s capital-light, high-margin model.
The long-anticipated Summer Release failed to inspire confidence. Airbnb expanded into local services—chefs, photographers, massages—and rebranded Experiences across hundreds of cities, while also revamping its app. But these were not game-changers. The lack of a loyalty program, despite its proven success at peers like Booking.com and Uber, was seen as a glaring omission.
New verticals like Services appear to offer limited repeat usage, are potentially lower-margin, and introduce operational overhead. With adjusted FCF margins already high and margin expansion opportunities limited, future upside hinges on reaccelerating top-line growth. Without clear evidence that this is achievable, the author exited, concluding that while Airbnb remains a good business, it may no longer be a good stock.
Previously, we summarized a bullish thesis on Airbnb (ABNB) by Chit Chat Stocks, which contrasts sharply with the bearish view from Wolf of Harcourt Street. The stock has since then been stable, experiencing a 0.3% appreciation in value. Chit Chat argues Airbnb is expanding its value proposition through Experiences and Services, laying the groundwork for deeper engagement, higher spending per user, and long-term platform expansion.
finance.yahoo.com
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