The rebound in travel amid the acceleration in vaccination rate and easing stay-at-home measures has given a solid boost to companies providing travel and lodging-related services, including Airbnb (ABNB).
Thanks to the improving operating environment, shares of Airbnb are on the move, gaining nearly 18% in one month. This growth is backed by the company’s robust financial performance, even when compared to its pre-pandemic levels. (See Airbnb stock charts on TipRanks)
It’s worth noting that Airbnb achieved its highest gross nights booked (nights booked before cancellations and alterations) in Q2 2021. Further, its gross bookings (GBV) of $13.4 billion were about 37% higher than in Q2 2019 (pre-COVID levels).
Thanks to the strong bookings, Airbnb’s top-line surged nearly 300% year-over-year. Also, it was 10% higher than the pre-pandemic levels. Airbnb noted that its adjusted EBIDTA improved, while its net loss narrowed.
Despite the strong quarterly performance, investors who hold portfolios on TipRanks continue to reduce their holdings. For instance, TipRanks’ Stock Investors tool indicates that investors currently have a Very Negative outlook on Airbnb stock, with 5.4% of investors who hold portfolios on TipRanks decreasing their exposure over the past month.
Investors’ pessimism over Airbnb stock likely stems from the rising cases of the coronavirus. The contagious delta variant of COVID-19 could dent Airbnb’s prospects in 2021. I maintain a Neutral view on Airbnb stock.
In fact, Airbnb stated that the “COVID-19 and the introduction and spread of new variants of the virus, including the Delta variant, will continue to affect overall travel behavior.” The company expects “year-over-year comparisons for Nights and Experiences Booked and GBV will continue to be more volatile.”
Airbnb projects its Q3 2021 Nights and Experiences Booked to be lower than Q2 2021 and pre-COVID levels. However, a strong GBV backlog will likely fuel strong growth in revenues and adjusted EBITDA in Q3.
Ivan Feinseth of Tigress Financial termed the Delta variant a concern. However, Feinseth maintained his Buy rating on Airbnb stock and has a price target of $206 that suggests a 21.7% upside potential.
Overall, on TipRanks, ABNB stock has an analyst rating consensus of Moderate Buy, based on 14 Buys, 7 Holds, and 1 Sell. The average Airbnb price target of $178.91 implies 5.7% upside potential to current levels.
Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.
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