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Airbnb Stock Is Surging on Strong Earnings. Analysts Are Cautious on Valuation.

Airbnb investors have bid up shares of the lodging-reservations platform.


Airbnb’s first earnings report as a public company is getting five-star reviews from investors, as shares of the lodging-reservations platform up more than 10% on Friday. But many analysts remain cautious on Airbnb stock given a valuation far above other companies in the online-travel-agency sector.

The fundamentals in the December quarter were better-than-expected, though still clearly impacted by the pandemic. For the quarter, Airbnb (ticker: ABNB) reported revenue of $859 million, which was down 22% from a year ago, but above Wall Street’s consensus forecast of $748 million. Revenue for the full year was $3.4 billion, down 30%.

Airbnb had a loss for the quarter of $3.9 billion, including $2.8 billion of stock-based compensation expense. That comes to a loss of $11.24 a share, which was worse than the Street consensus forecast for a loss of $9.16 a share. For the full year, the company lost $4.6 billion.

The company said “nights and experiences booked,” which includes room nights plus each seats booked for experiences net of cancellations, was 46.3 million in the quarter, down 39% from a year ago. Gross booking value, which includes amounts passed through to providers, was $5.9 billion in the quarter, down 31%.

Airbnb said it is “too early” to predict overall recovery trends for 2021. “We have been encouraged by our continued resilience and recovery, and are optimistic about the upcoming travel rebound,” the company said. “However, we continue to have limited visibility for growth trends in 2021 given the difficulty in determining the pace of vaccine rollouts and the related impact on willingness to travel. We are not providing an outlook for the rest of 2021 at this time.”

The tug of war here is between bulls who see Airbnb as a category-dominant player in alternative lodging that should benefit from the reopening of the travel market later in the year, and skeptics who find valuation off-putting. While Airbnb trades for about 27 times estimated 2021 sales, Booking Holdings (BKNG) stock trades for about 10 times sales, and Expedia Group (EXPE) about 3 times.

Needham analyst Chris Pierce repeats his Buy rating on Airbnb stock, lifting his price target to $225 from $200. “We think a higher premium is warranted given Airbnb’s category-creator/pure-play/scarcity status, along with brand recognition and leadership gap versus peers at tremendous scale,” he writes in a research note. “Given company execution through the teeth of the pandemic we don’t want to miss what we consider the best way to play a travel recovery.”

Pierce adds that demand has received a boost from a growing number of use cases, including the work from home trend, longer stays and rural rentals. But he adds that the company still gets 40% of room nights in urban destinations. “We think investors can feel comfortable that Airbnb can continue to thrive as more cities open and cross border travel picks up,” he writes.

Other analysts are more cautious. 

BofA Global Research analyst Justin Post keeps his Neutral rating and $210 target price, writing that Airbnb had an “impressive start as a public company,” but that with the stock trading at 19 times his revised 2022 revenue forecast, and initial-public-offering lock-up expirations still to come, he’s not recommending the stock.

Oppenheimer’s Jed Kelly repeats his Perform rating, though he is bullish on the fundamentals. “We see Airbnb generating outsized share gains into a massive recovery that ultimately drives upside to consensus,” he writes, while adding that “Airbnb is priced at a significant premium to other disruptive internet marketplaces; therefore, we would wait for a better entry point.”

Wells Fargo’s Brian Fitzgerald likewise remains cautious, though he moves up his target price to $200 from $160. “While results and commentary were encouraging, pockets of strength remain oriented toward domestic and rural stays, offering little insight into when and how robustly other key offerings might rebound,” he writes. “While we remain favorable on Airbnb’s prospects…given uncertainties and a premium valuation, we maintain our Equal Weight rating.”

Airbnb stock is up about 12% to $203.77.

Write to Eric J. Savitz at [email protected]

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