Airbnb’s current stock price is 6% below the first day of trading on the NASDAQ on December 10 last year and well below the latest Wall Street estimates. Improved macro conditions for tourism, strong financial foundations and Airbnb innovation should accelerate the company’s growth in the near future.
Airbnb (ABNB), a private accommodation booking company around the world, looks like one of the best choices to invest in the COVID-19 recovery and travel consumer spending today.
The time to buy Airbnb looks like a good time given the massive US and European vaccinations and the gradual resumption of international air travel.
At the same time, the price of shares of Airbnb at the close of trading on Monday was $ 135.91, which is 6% below the first day of trading on the NASDAQ on December 10 last year and far from the maximum of $ 216.94 reached on February 11 this year.
Recent evaluations of Airbnb shares by investment company analysts suggest Wall Street expects these shares to recover in the coming year.
Last week, Wells Fargo upgraded Airbnb’s stock from Neutral to Outperforming with a target price of $ 200.
At the end of April, three analysts at once gave their high marks to Airbnb shares:
Needham – Buy rating, target price $ 210;
Evercore ISI – outperforming rating, target price $ 245;
Wolfe Research has estimated the value of Airbnb’s share to be in line with the sector, with a target price of $ 180 per share.
Airbnb Q1 2021 Report Sees Positive Signal
Airbnb, with over 4 million hosts on its platform and hosting over 900 million guests in over 220 countries and regions, announced its financial results for the first three months of 2021 on May 13.
Although earnings beat Wall Street’s expectations, Airbnb posted a record net loss of $ 1.17 billion for the quarter and stocks reacted to the report with a drop.
The decline in shares was also impacted by the expiration of the lockdown following the company’s IPO, allowing insiders to sell their shares for the first time since Airbnb went public in December.
However, investors should pay more attention to three key indicators that prove the fact of the renewed growth of the company.
1. Airbnb’s Nights and Experiences Booked increased 13% year-on-year to 64.4 million. This is a big breakthrough compared to the decline in the previous 4 quarters of 2020 (figures for declines are shown in brackets in the table).
2. The company’s revenue (Revenue) in the first quarter grew by 5% compared to last year’s value, also being higher in sequential growth compared to the previous fourth quarter.
3. Third, Airbnb’s Free Cash Flow rose to its highest value, after negative (value in parentheses) in the fourth quarter. This gives the company many opportunities to expand its core business this year.
At the same time, according to estimates of the management of Airbnb, this year the company’s revenues will grow by about 40%.
Airbnb takes steps to adapt to current realities and improve its platform
Analysts note that Airbnb has been able to increase revenues and bookings for accommodations and entertainment as the company embarks on a course to adapt to changing consumer preferences.
Airbnb quickly realized that with still high COVID-19 cases and limited air travel, people would be looking for vacation options away from crowds and in nearby regions, and homeowners should be given more privileges as private housing offers skyrocket. decreased due to the pandemic.
The company also noted that the platform saw an increase in average bookings, seeing this as a growing trend for work from home.
“The share of Airbnb stays for 28 days or more increased from 14% on average bookings in 2019 to 24% in the first quarter of 2021. In New York, 62% of our 2021 summer nights are already booked for extended stays, ”the company said in a press release on Monday.
Airbnb believes that “the boundaries between travel and life are blurring and the global pandemic has increased the ability to live anywhere,” and the private rental company can benefit from this.
On Monday, Airbnb unveiled over 100 innovations and updates across the company’s entire service, with improvements for travelers and homeowners alike.
To create a “world-class service” and improve customer support on the Airbnb platform, the company will double its support staff this summer and increase support languages from 11 to 42 languages and offer more personalized support to guests.
Airbnb users will get more flexible accommodation and entertainment options, a faster checkout process, more detailed check-in instructions, extended reviews, and clearer cancellation policies. Airbnb’s support service and interface for home use have also been improved.
Some skeptics point out that Airbnb continues to face strong market competition, including from Expedia Group’s (EXPE)-owned VRBO. Nevertheless, Airbnb has a recognizable brand, a wide audience reach, and an improvement in the service should be beneficial, since the demands and requests of users in tourism are high.
Given the large deferred demand and current price drops, investors should still be betting on Airbnb stock.