Airbnb (ABNB) was a market favorite after its debut in January 2021. However, in the second half of 2021, as the travel industry was hit by severe headwinds thanks to the second COVID wave, its stock suffered.
Just when it seemed set to bounce back, the Russia-Ukraine conflict took a toll on the stock. The Omicron variant of the coronavirus hasn’t helped either.
If the war continues in Europe, expect the headwinds to continue. However, for long-term investors, the drop in Airbnb stock is an opportunity. The market is quite bullish about the stock as it feels the global travel and leisure industry is going to see a considerable surge in demand after close to two hard years of COVID-19 restrictions.
Airbnb is a U.S.-based organization that operates an online marketplace for travel. Its disruptive business model, unlike traditional hotels, does not include ownership of any of the properties that are listed on its platform. Instead, the company receives commissions from each of the bookings that are made by its customers through its web- and mobile-based platforms.
Airbnb is a huge brand that has kind of became synonymous with the modern traveler’s vacation needs. The stock has largely remained flat in the last six months, juggling through various issues such as high inflation levels, rising interest rates, global supply chain disruptions, and even the recent Russia Ukraine conflict.
Unlike other hospitality stocks, Airbnb hasn’t merely survived but thrived in harsh market conditions. It has already sailed through tough pandemic times without losing much of its valuation.
As the travel industry is poised to grow, Airbnb is in a perfect position to use that momentum for capitalizing its own growth. Even if a new variant of COVID-19 comes out once again, the company’s inventory would be perfect for maintaining the social distancing norms.
We’re bullish.
Key Financial Metrics
Airbnb’s fourth-quarter and full-year 2021 financials have projected strong prospects.
Airbnb’s net income for the fourth quarter increased by $3.9 billion compared to the same period of 2020, and for the entire year 2021, there was an improvement of $322 million compared to that of 2019.
Such improvement in income was driven by the 80% year-over-year growth in quarterly revenues. The adjusted EBITDA of $333 million recorded in the last quarter was the company’s highest fourth quarter ever, illustrating significant improvement from the EBITDA losses of the past two years.
Airbnb has a Moderate Buy rating consensus on TipRanks, based on nine Buys, 18 Holds, and one Sell assigned over the past three months.
The average Airbnb price target of $199.12 suggests 13.8% upside potential.
Popular Choice for Travelers
Airbnb is becoming the first choice of travel stays for millennials. Airbnb minutely focuses on what the hosts and the guests actually desire, and then upgrades their services based on those demands.
In the last winter itself, it launched over 50 upgrades. Due to this reason, customers think highly of its services and in the process end up recommending more people to take up its services.
Besides, the company’s top-to-bottom insurance coverage through which it provides its hosts $1 million in damage protection has made it more popular amongst people who want to rent out their spare living spaces for shorter or longer periods. The company chalked up 300.6 million total nights during 2021, coupled with a 96% improvement in its gross booking value.
The global travel and tourism market might surpass $8.9 trillion by 2026, growing by a CAGR of 3.1% between 2021 to 2026. This creates a huge market opportunity for companies like Airbnb.
Airbnb is poised to be a leader in this huge hospitality industry. Its flexible business model allows it to adjust as per the market’s situation, something which most other travel companies cannot offer.
There are still tons of growth prospects for the company, and its management is also intending to make it the ultimate host by unlocking the next generation of hosts this year.
However, because of the huge inflation levels as well as the war-related disturbances in certain regions of Europe one should not expect skyrocketing gains from the company this year.
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