Airbnb's International Revenue Spotlight Highlights Looming EU Regulatory Threats

What happened

A recent Zacks article examines Airbnb's international revenue trends, suggesting potential for growth outside North America as Wall Street adjusts predictions. However, the DeepValue master report reveals that EMEA, Airbnb's second-largest region by revenue at $4.729B in FY2025, faces severe regulatory risks with the EU Short-Term Rental Regulation effective May 2026, which could discourage hosts and reduce listings. Despite strong FY2025 performance with $4.613B in FCF and aggressive buybacks, management guides for only stable FY2026 margins amidst reinvestment and rising costs, including $1.9B in cloud commitments through 2031. Enforcement actions like Spain's removal of 65,935 listings and a €65M fine exemplify the supply shocks that could undermine international growth, especially as EMEA ADR rose 8% in 2025. Investors must weigh international revenue prospects against the concrete threat of regulatory friction, with the stock priced at 27.4x P/E assuming sustained profitability.

Implication

The focus on international revenues fails to address the core downside risk from EU compliance, which could lead to measurable supply losses and booking declines in key markets like EMEA. Airbnb's growth initiatives, such as hotel partnerships and experiences, may not fully compensate for delistings, putting pressure on conversion rates and revenue stability. Valuation remains high at 27.4x P/E, leaving little margin of safety if regulatory outcomes or the IRS dispute—claiming $1.3B in tax—turn adverse. While buybacks ($5.6B remaining authorization) support per-share value, they cannot shield against operational headwinds from enforcement or margin compression. Investors should wait for post-May 2026 evidence on regulatory impact and monitor Q1 results for signs of sustainable international growth amid these challenges.

Thesis delta

The new article on international revenues adds context but does not shift the thesis, which remains centered on regulatory overhang and margin stability. The delta is increased emphasis on international market resilience as a potential offset to EMEA risks, yet this is already factored into the 'WAIT' call with no material change to the probability-weighted scenarios.