Buy Airbnb Stock Ahead Of The July Fourth Travel Boom?

POLAND – October 6, 2020: The Airbnb logo is shown on a smartphone in this image. (Image… [+]) Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images illustration)
Getty Images/SOPA Images/LightRocket
As investors brace for a large upcycle in the hotel business, Airbnb stock (NASDAQ: ABNB) has recovered approximately 14% from its lows of near $134 per share in May to around $153 per share now.
The forthcoming Independence Day weekend is seen as a turning moment in the travel and tourist industry’s recovery from the Covid-19 outbreak in the United States. About 46% of Americans are now completely vaccinated against Covid, and mask bans in a number of tourist areas have been repealed, potentially resulting in huge pent-up demand for travel. To put things in perspective, the American Automobile Association estimates that over 47.7 million Americans will travel between July 1 and July 5, with travel returning to pre-pandemic levels nearly entirely. Demand is expected to continue high until Labor Day weekend in early September, as individuals take advantage of the first summer after the Covid lockdowns.
Now, Airbnb is in a great position to profit from the impending boom, as we predict that more people will opt for driving vacations, probably to less populated places, with longer stays in mind – a trend that should help vacation-sharing companies. The corporation has also made preparations for this increase, having completed key platform modifications in May.
However, at current prices of over $150 per share and a forecast revenue multiple of over 17 times, we believe Airbnb stock is overpriced. There are less expensive methods to profit from the tourism boom. For example, Expedia, the online travel giant that also owns Vrbo, a fast-growing vacation rental company, is valued at around $25 billion, or less than three times predicted sales in 2021. Expedia’s revenue growth rates are predicted to be comparable to Airbnb’s (about 60% this year), and it is expected to break even, unlike Airbnb, which is still losing money. Airbnb is worth roughly $120 per share, or about 15 times estimated revenue in 2021. Check out our interactive analysis of Airbnb’s valuation: Is It Expensive Or Inexpensive? for additional information about Airbnb’s business and a comparison to competitors
[5/27/2021] What Is Going On With Airbnb’s Stock?
The stock of Airbnb (NASDAQ: ABNB) has dropped nearly 25% in the previous month, and is currently trading at around $135 per share. Here are a few recent company developments and what they represent for the stock.
ADDITIONAL INFORMATION FOR YOU
Airbnb reported solid Q1 2021 numbers earlier this month, with revenues up 5% year over year to $887 million, thanks to rising immunization rates, particularly in the United States, which led to more travel. The number of nights and experiences booked on the platform increased by 13% year over year, while the gross booking value per night increased by roughly 30% to around $160. In addition, the corporation is reducing its losses. Because of superior cost control, adjusted EBITDA increased to negative $59 million in Q1 2020, compared to negative $334 million in Q1 2020, and the business intends to break even on an EBITDA basis in Q2. Summer and the remainder of the year might see even better results, thanks to pent-up demand for holidays and increased job flexibility, which should encourage workers to stay longer. Airbnb, in particular, looks to benefit from an increase in urban and cross-border travel, two categories in which it has long dominated.
Airbnb announced some major platform updates earlier this week as it prepared for what it calls “the biggest travel comeback in a century.” Greater flexibility in searching for booking dates and destinations, as well as a more straightforward onboarding procedure, make it easier to become a host. As a result of these advancements, the company should be able to better capitalize on recovering demand.
Although we believe Airbnb stock is slightly overvalued at current pricing of $135 per share, the risk-to-reward profile has improved significantly, with the company falling down nearly 40% from its February all-time highs. We estimate the company’s worth to be at $120 per share, or about 15 times projected sales in 2021. Check out our interactive analysis of Airbnb’s valuation: Is It Expensive Or Inexpensive? for additional information about Airbnb’s business and a comparison to competitors
[5/10/2021] Is It Time To Buy Airbnb Stock At $150?
When we last updated in early April, Airbnb stock (NASDAQ: ABNB) was trading near $190 per share, we remarked that it was overpriced (see below). Since then, the stock has corrected by around 20% and is currently trading at around $150 per share, down nearly 30% from its all-time highs. Is the stock of Airbnb appealing at the moment? While we still believe prices are excessive, the risk-to-reward profile for Airbnb shares has improved significantly. The stock is currently trading at roughly 20 times consensus 2021 revenues, down from around 24 times during our previous report. Revenue is expected to increase by more than 40% this year and roughly 35% next year, indicating a robust growth potential.
With almost a third of the population now completely vaccinated, the worst of the Covid-19 pandemic appears to be behind the United States, and there is likely to be significant pent-up demand for travel. While airlines and hotels should profit to some extent, demand is unlikely to return to pre-Covid levels very soon, as they are heavily reliant on business travel, which may remain subdued as the remote working trend continues. Airbnb, on the other hand, should see a jump in demand as leisure travel ramps up, with people opting for driving vacations to less densely populated areas and staying for longer periods of time. Airbnb stock could be a top selection for investors wanting to profit from the initial reopening.
To be sure, the company’s first-quarter earnings, which are due on Thursday, will likely affect much of the stock’s near-term volatility. While the company’s gross bookings fell 31% year over year in the fourth quarter owing to Covid-19 comeback and related lockdowns, the year-on-year decline is expected to moderate in the first quarter. Q1 revenue is expected to drop 15% year over year, according to the consensus. Now, if the company can offer a solid revenue beat and a more optimistic outlook, the stock is likely to climb from current levels.
For more information on Airbnb’s business and our pricing estimate, see our interactive dashboard research on Airbnb’s Valuation: Expensive Or Cheap?
[4/6/2021] Why Isn’t Airbnb Stock The Best Travel Recovery Bet?
Due to the overall sell-off in high-growth technology firms, Airbnb (NASDAQ: ABNB) stock is down nearly 15% from its all-time highs, trading at around $188 per share. The future of Airbnb’s business, on the other hand, is very bright. It appears that the worst of the pandemic is now behind us, and there is going to be a lot of pent-up demand for travel. According to the Bloomberg vaccine tracker, Covid-19 vaccination rates in the United States have been moving higher, with roughly 30% of the population receiving at least one injection. Cases of Covid-19 are also down from their highs. Airbnb may now have an advantage over hotels, as consumers choose less heavily populated areas for longer-term stays. According to consensus predictions, Airbnb’s income will increase by around 40% this year. In comparison, Airbnb’s revenue in 2020 was just down 30%.
While we believe that Airbnb’s long-term prospects are intriguing, we believe that the stock is overvalued given the company’s excellent growth rates and the fact that its brand is synonymous with holiday rentals. Even after the recent fall, the corporation is worth more than $113 billion, or approximately 24 times expected revenues in 2021. According to consensus forecasts, Airbnb’s sales will increase by roughly 40% this year and by about 35% next year. There are much less expensive methods to play the post-Covid recovery in the travel sector. For example, Expedia, which also owns Vrbo, a fast-growing vacation rental company, is valued at around $25 billion, or around 3.3 times predicted sales in 2021. Expedia’s growth is expected to outpace Airbnb’s, with revenue expected to increase by 45 percent in 2021 and another 40 percent in 2022, according to consensus projections.
Check out our interactive dashboard study of Airbnb’s valuation: Is It Expensive Or Inexpensive? We examine the company’s sales and present valuation, as well as its competitors in the hotel and internet travel industries.
[2/12/2021] Is Airbnb’s Uproar Justifiable?
Since the beginning of 2021, the stock of Airbnb (NASDAQ: ABNB) has risen over 55 percent, and it now trades at around $216 per share. Since its IPO in early December 2020, the stock has increased by more than threefold. Although there hasn’t been any recent news from the company to justify such large gains, there are a few of other factors that have likely contributed to the stock’s rise. First, as the quiet period for analysts at banks that underwrote Airbnb’s IPO ended in January, sell-side coverage surged significantly. The stock currently has over 25 analysts covering it, up from just a couple in December. Despite varied reviews from analysts, it is likely that Airbnb has benefited from increased awareness and traffic. Second, the Covid-19 vaccine is gaining traction in the United States, with upwards of 1.5 million doses being provided every day, and Covid-19 cases in the United States are also decreasing. This could eventually help the travel industry return to normal, with companies like Airbnb seeing enormous pent-up demand.
However, we do not believe that Airbnb’s current valuation is justifiable. (Related: Is Airbnb Expensive Or Inexpensive?) The corporation is worth almost $130 billion, or approximately 31 times expected revenues in 2021. This year, Airbnb’s sales are expected to increase by around 37%. In comparison, Expedia, the online travel giant that now owns Vrbo, a burgeoning vacation rental site,/nRead More