Airbnb stock (NASDAQ: ABNB) has done fairly well, rallying by about 6% over the last week (five trading days) and by almost 10% over the last month. This compares to the S&P 500 which was up by just about 2% over the past month. The recent gains come on the back of some brokerage analyst upgrades, as well a moderate decline in U.S. Covid-19 cases over the past week or so. While the U.S. saw a big Covid surge last month due to the spread of the highly infectious Delta variant, with average daily cases rising from around 80,000 in early August to around 160,000 as of the end of the month, the number has declined to under 150,000 currently. This could bode well for travel stocks such as Airbnb. Separately, Pfizer’s Covid-19 vaccine also received full approval from the U.S. FDA and this could help to boost vaccination rates in the country.
Now, despite the moderate decline in U.S. infections, Covid-19 is actually proving quite hard to contain even in highly vaccinated countries, as the virus has been mutating. However, we think that Airbnb stock is one of the best-positioned names in the travel industry to tackle an extended pandemic. If the pandemic lingers on, people are more likely to opt for driving holidays, possibly to less populated areas, while planning longer stays as companies delay return to office plans. Airbnb’s inventory is also likely to be more suited to social distancing, compared to hotels that have many common areas and this could also play in the company’s favor.
Trefis values Airbnb stock at about $160 per share, or about 18x projected 2021 revenues. This is roughly in line with the current market price. See our interactive analysis on Airbnb’s Valuation: Expensive Or Cheap? for more details on Airbnb’s business, valuation and comparison with peers.
[8/17/2021] Is Airbnb The Best Travel Stock As Delta Variant Surges?
Airbnb published a better than expected set of Q2 2021 earnings last week, although the strong results were overshadowed by concerns that surging Covid-19 cases in the U.S. could impact the company’s near-term performance.
Over Q2, Airbnb saw its revenue rise by almost 4x compared to last year to $1.34 billion, with its net loss narrowing considerably to about $68 million for the quarter. The underlying trends for the business were also strong, with average daily rates for bookings rising to $161, up from $160 in Q1, and up by over 40% year-over-year. However, the company struck a cautious tone with its near-term outlook. The highly infectious delta variant of the virus that causes Covid-19 has been spreading in the U.S. and daily cases in the country have surged to levels of around 130,000 cases per day presently, a fourfold increase compared to last month. Although Airbnb expects Q3 revenues to be its strongest ever, it has indicated that the number of bookings for the quarter would be below that of Q2 2021, due to seasonality and concerns over the current Covid-19 surge. The company also said that its Q4 performance would depend on the progress of vaccinations and the containment of new virus variants.
While the current virus surge is concerning, we think that Airbnb is better positioned compared to hotels and other segments of the travel industry to tackle an extended pandemic. More people are likely to opt for driving holidays, possibly to less populated areas, while planning longer stays as companies have delayed return to office plans. For example, over Q2, the company said that 19% of stays booked on its platform were for 28 days or more, with the number standing at 24% in Q1. Airbnb’s inventory is also likely to be more suited to social distancing, compared to hotels that have many common areas and this could also play to the company’s favor.
We value Airbnb stock at about $160 per share, about 18x projected 2021 revenues. This is about 8% ahead of the current market price. Although there are cheaper ways to play the vacation rental business, via the likes of Expedia which also owns Vrbo, a fast-growing vacation rental business, we think Airbnb’s brand and strong growth should make it a top pick in the space. See our interactive analysis on Airbnb’s Valuation: Expensive Or Cheap? for more details on Airbnb’s business and comparison with peers.
[7/1/2021] Buy Airbnb Stock Ahead Of The July Fourth Travel Boom?
Airbnb stock (NASDAQ: ABNB) has gained about 14% from its lows of near $134 per share seen in May, to about $153 per share currently, as investors brace for a big upcycle in the hotel industry.
The upcoming Independence Day weekend is viewed as an inflection point of sorts in the U.S. travel and tourism industry’s recovery from the Covid-19 pandemic. About 46% of Americans are now fully vaccinated against Covid, and mask mandates have also been lifted in multiple tourist destinations, and this could result in significant pent-up demand for travel. For perspective, the American Automobile Association expects that over 47.7 million Americans will be traveling between July 1 and July 5, with travel recovering almost fully to the pre-pandemic levels. It’s very likely that demand will remain elevated through the Labor Day weekend in early September as people make the most of the first summer post the Covid lockdowns.
Now, Airbnb is very well positioned to take advantage of the coming boom, as we believe that more people will opt for driving holidays, possibly to less populated areas, while potentially planning longer stays – a trend that should benefit vacation-sharing companies. The company has also prepared for this surge, carrying out some major upgrades to its platform in May.
That being said, we think Airbnb stock looks a bit expensive at current prices of over $150 per share, trading at over 17x forward revenues. There are cheaper ways to play the travel boom. For example, online travel major Expedia which also owns Vrbo, a fast-growing vacation rental business, is valued at about $25 billion, or under 3x projected 2021 revenue. Expedia’s revenue growth rates are also expected to be comparable to Airbnb’s (about 60% this year) and it is actually likely to turn a profit, unlike Airbnb which remains in the red. We value Airbnb at about $120 per share, or about 15x projected 2021 revenue. See our interactive analysis on Airbnb’s Valuation: Expensive Or Cheap? for more details on Airbnb’s business and comparison with peers.
[5/27/2021] What’s Happening With Airbnb Stock?
Airbnb stock (NASDAQ: ABNB) has declined by about 25% over the last month, trading at about $135 per share currently. Below are a few recent developments for the company and what it means for the stock.
Airbnb posted a strong set of Q1 2021 results earlier this month, with revenues increasing by about 5% year-over-year to $887 million, as growing vaccination rates, particularly in the U.S., led to more travel. Nights and experiences booked on the platform were up 13% versus the last year, while the gross booking value per night rose to about $160, up around 30%. The company is also cutting its losses. Adjusted EBITDA improved to negative $59 million, compared to negative $334 million in Q1 2020, driven by better cost management and the company expects to break even on an EBITDA basis over Q2. Things should improve further through the summer and the rest of the year, driven by pent-up demand for vacations and also due to increasing workplace flexibility, which should make people opt for longer stays. Airbnb, in particular, stands to benefit from an increase in urban travel and cross-border travel, two segments where it has traditionally been very strong.
Earlier this week, Airbnb unveiled some major upgrades to its platform as it prepares for what it calls “the biggest travel rebound in a century.” Core improvements include greater flexibility in searching for booking dates and destinations and a simpler onboarding process, which makes it easier to become a host. These developments should allow the company to better capitalize on recovering demand.
Although we think Airbnb stock is slightly overvalued at current prices of $135 per share, the risk to reward profile for Airbnb has certainly improved, with the stock now down…
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