Airbnb is near its annual high. Is the stock still attractive?
Airbnb $ABNB has its strongest half-year in several years behind it. Revenue in the second quarter grew by 17% to $3.608 billion, the number of nights and experiences booked grew by 10%, and management raised its full-year guidance. Over the last twelve months, the company generated $4.827 billion in free cash flow, or 37% of revenue. The stock reacted with a rise to an annual high of $193.45 on August 24.
Key points
Ninety percent of listings in New York disappeared after the 2023 ban. Airbnb itself stated at the time what share of global revenue that market represented. That number is lower than most investors expect, and it changes the view of the European threat.
Two-fifths of Airbnb's revenue comes from Europe, the Middle East, and Africa. But that 39.5% also includes markets where Brussels' rules have no reach at all. The truly exposed part can be bounded by three deductions.
Paris has the strictest regime in Europe: a 90-day cap, platform liability, and fines in the hundreds of thousands of euros. France nevertheless was among the four established markets where Airbnb accelerated in the second quarter.
Revenue grew 17%, bookings volume only 10%. The rest came from rates and the weak dollar. The same gap is hidden in the third-quarter outlook, where guidance of 15–17% means significantly less in constant currency.
On earnings, Airbnb is roughly twice as expensive as Booking; on cash flow, the difference is only a fifth. Behind that chasm is a single cost item. Meanwhile, management bought back its own shares this year at around $134.
But on September 9, the European Commission unveiled the Affordable Housing Act. The proposal gives cities a uniform test by which they may restrict short-term rentals, while shielding them from lawsuits that had struck down their existing bans. Europe, the Middle East, and Africa brought Airbnb $1.425 billion in the second quarter, or 39.5% of total revenue.
Eight years of income per one apartment: what Brussels actually proposed
The Commission presented the proposal as support for authorities in areas under the greatest pressure, not as a Europe-wide ban on short-term rentals. The difference between those two sentences determines how much risk an investor is buying.
The core is a uniform methodology by which an area can be designated as under housing stress. The threshold is set so that an average apartment costs at least eight years of disposable income per capita, or that the ratio remains lower but has been rising for the last ten years. Once an area passes the test, authorities may restrict short-term rentals and purchases of properties for tourist rental. But they must demonstrate a tangible negative impact lasting at least three years. Measures must be proportionate, non-discriminatory, and may remain in force for a maximum of five years; renting out one's own primary residence for short stays is exempt.
The most important detail gets lost in headlines. The proposal removes short-term rentals from the scope of the Services Directive and thus changes the legal position of cities. Existing local bans had been struck down by courts precisely because they clashed with single-market rules. Energy and Housing Commissioner Dan Jørgensen summed it up by saying that authorities should not fear lawsuits.
The Commission backs the scale of the problem with numbers. Short-term rentals make up 1.2% of the EU housing stock, but in tourist destinations up to a fifth. Activity on the four largest platforms grew by 93% between 2018 and 2024, and in Madrid there are roughly 40 short-term rentals for every 100 long-term rental units.
Airbnb responded that the framework, in the company's view, would not add a single apartment to the long-term market and would only bring uncertainty to hosts. Its head of European government relations, George Mavros, pointed to construction, renovations, and vacant apartments. Tech association CCIA, of which Airbnb is a member, called the proposal an improvement over cities' current practice, but objected to the missing mechanism to challenge unreasonable restrictions.
What remains is timing. This is not a valid law; the document must pass through the European Parliament and member states, and its shape may shift in that process.
Two-fifths of revenue comes from Europe, but only a fraction is at risk
The EMEA region brought in revenue of $1,425 million in the second quarter out of a total of $3,608 million, up 15.6% year on year from last year's $1,233 million. The region is thus growing roughly at the pace of the whole company. For the first half, its share is lower, $2,172 million out of $6,286 million, because the European season peaks only in the third quarter.
But here the precise data ends and estimates begin. Airbnb does not disclose revenue by country or city, so no outsider can compute the exposure to the new framework exactly. At least the following can be subtracted:
EMEA is not the EU. The region includes the UK, Turkey, the Middle East, and Africa—markets where the Brussels framework has no reach.
Only part of the territory passes the test. Short-term rentals make up 1.2% of the union's housing stock, and the eight-year threshold will be met mainly by large cities and tourist destinations, not entire states.
Primary residences remain outside. Restrictions do not apply to hosts who rent out the apartment they themselves live in.
What remains is the share of commercially operated entire apartments in European cities under pressure. That is the true core of the risk, and it is substantially smaller than 39.5% of revenue, even though it cannot be quantified from public data.