We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Airbnb Dips 21.1% in 3 Months: Should You Hold or Fold the Stock?
Read MoreHide Full Article
Airbnb Inc. (ABNB - Free Report) has seen its stock price plummet 21.1% in the past three months compared with a 13.5% decline in the Zacks Internet-Content industry and against a rise of 1.7% in the broader technology sector, leaving investors wondering whether to maintain their positions or cut their losses.
This significant decline prompts a closer examination of the company's fundamentals, market position and prospects to determine the best course of action for shareholders.
ABNB, which is a leading booking platform for unique stays and experiences, has also underperformed the S&P 500’s rally of 5.1% in the same time frame.
Three-Month Price Performance
Image Source: Zacks Investment Research
Airbnb is suffering from greater volatility in travel demands due to macroeconomic uncertainties and geo-political tensions. It is facing shorter booking lead times globally and signs of sluggish demand from guests in the United States.
Rising competitive pressure in the online travel booking market from the two juggernauts — Booking Holdings (BKNG - Free Report) and Expedia (EXPE - Free Report) — does not bode well for ABNB’s market position. Listing and meta search websites like TripAdvisor (TRIP - Free Report) and Trivago are other strong rivals of ABNB.
Nevertheless, strength in Airbnb’s marketplace, which connects hosts and guests online, and growing listings on its platform are helping it penetrate urban and non-urban areas rapidly.
As the company faces both exciting opportunities and significant hurdles in the online travel booking space, one should carefully observe its fundamental strength and monitor recent developments, which might be rewarding in the long run.
Robust Key Offerings to Drive ABNB Stock in the Long Run
Airbnb’s strong core business, strategic investments and expanding global footprint, which are driving growth in its Gross Booking Value (GBV), are major positives. In second-quarter 2024, GBV amounted to $21.28 billion, which rose 11% from the prior-year quarter.
The company’s growing investments to strengthen its core services are noteworthy. It has added several features and upgrades to its core service to make its platform more reliable and affordable for guests.
The launch of Guest Favorites, a collection of the most-loved homes on Airbnb based on ratings, reviews and reliability data, is driving the company’s momentum among guests. ABNB has witnessed more than 150 million nights booked at Guest Favorites listings since the launch.
The company’s unveiling of a label feature, which ranks the top-listed properties with a badge, is a plus. It enables customers to choose from a wide range of properties.
Airbnb’s expanding international footprint is a positive. Its deepening focus on under-penetrated or less mature international markets to unlock growth opportunities is noteworthy. The company’s growth in gross nights booked in these markets was more than that in the core markets. It intends to continue investing in less mature markets throughout 2024 and beyond for further growth.
ABNB’s initiative to expand its brand positioning beyond travel accommodations with the global rollout of Airbnb Icons, which is a new category of extraordinary experiences, bodes well.
Airbnb’s commitment to make hosting mainstream is another positive. Its strong investments to grow the size and quality of the host community are noteworthy. The company is expanding use cases, and supporting various kinds of hosts (the ones who share their homes with guests) to attract more hosts globally to its platform. The initiative will help hosts deliver high-quality stays and experiences to guests. Airbnb is raising awareness around hosting in order to make it easier for hosts to get started.
ABNB’s efforts to boost the quality of listings on its platform are benefiting its hosting business. In second-quarter 2024, the company surpassed 8 million active listings, owing to continued growth across all regions and market types. It also removed 200,000 listings that failed to meet its guests’ expectations to deliver enhanced stay experiences.
The company intends to expand its global network and partner with communities to help more hosts join its platform.
As of June 30, 2024, cash and cash equivalents, and short-term investments amounted to $11.3 billion compared with its long-term debt of $1.99 billion. The company also generated net cash of $1.1 billion from operating activities and a free cash flow of $1 billion in second-quarter 2024.
A stable balance sheet and strong liquidity position will not only help the company pursue acquisitions but will also enable it to repurchase shares. The company repurchased $749 million of its shares in the same quarter.
Falling Earnings Estimates Do Not Bode Well for ABNB
Airbnb’s strong investments to bolster its key offerings in a bid to deliver enhanced experience to both host and guest communities are expected to drive its top-line growth in the short and the long run.
For the third quarter of 2024, the company expects revenues between $3.67 billion and $3.73 billion, implying year-over-year growth of 8-10% on a reported basis. The Zacks Consensus Estimate for the same is pegged at $3.71 billion, indicating a year-over-year increase of 9.3%.
The consensus mark for 2024 revenues is pegged at $11.04 billion, indicating year-over-year growth of 11.3%.
Macroeconomic headwinds and seasonal impacts are making investors bearish about the stock, which is evident from the downward revision in earnings estimates.
Intensifying competition poses pricing pressure, which does not bode well for ABNB’s margin expansion.
The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $2.27 per share, which has moved 8.1% south over the past 30 days. The estimate suggests a year-over-year fall of 5%.
The consensus estimate for 2024 stands at $4.43 per share, indicating a year-over-year decline of 38.8%. The estimate has moved 4.9% south over the past 30 days.
Image Source: Zacks Investment Research
ABNB Stock Does Not Appear Cheap
Airbnb’s near-term prospects remain foggy. The ABNB stock is not so cheap, as the Value Style Score of C suggests a stretched valuation at this moment.
The company’s stock is trading at a premium with a forward 12-month Price/Earnings of 23.75X compared with the industry’s 21X.
Image Source: Zacks Investment Research
Conclusion
Airbnb has been grappling with stiff competition, geo-political tensions and macro headwinds despite its strong core business, expanding global presence and strategic investments.
The company’s stretched valuation and falling estimates are concerning.
Existing investors may consider holding their positions, but new investors should exercise caution and wait for a more favorable entry point.
Image: Bigstock
Airbnb Dips 21.1% in 3 Months: Should You Hold or Fold the Stock?
Airbnb Inc. (ABNB - Free Report) has seen its stock price plummet 21.1% in the past three months compared with a 13.5% decline in the Zacks Internet-Content industry and against a rise of 1.7% in the broader technology sector, leaving investors wondering whether to maintain their positions or cut their losses.
This significant decline prompts a closer examination of the company's fundamentals, market position and prospects to determine the best course of action for shareholders.
ABNB, which is a leading booking platform for unique stays and experiences, has also underperformed the S&P 500’s rally of 5.1% in the same time frame.
Three-Month Price Performance
Image Source: Zacks Investment Research
Airbnb is suffering from greater volatility in travel demands due to macroeconomic uncertainties and geo-political tensions. It is facing shorter booking lead times globally and signs of sluggish demand from guests in the United States.
Rising competitive pressure in the online travel booking market from the two juggernauts — Booking Holdings (BKNG - Free Report) and Expedia (EXPE - Free Report) — does not bode well for ABNB’s market position. Listing and meta search websites like TripAdvisor (TRIP - Free Report) and Trivago are other strong rivals of ABNB.
Nevertheless, strength in Airbnb’s marketplace, which connects hosts and guests online, and growing listings on its platform are helping it penetrate urban and non-urban areas rapidly.
As the company faces both exciting opportunities and significant hurdles in the online travel booking space, one should carefully observe its fundamental strength and monitor recent developments, which might be rewarding in the long run.
Robust Key Offerings to Drive ABNB Stock in the Long Run
Airbnb’s strong core business, strategic investments and expanding global footprint, which are driving growth in its Gross Booking Value (GBV), are major positives. In second-quarter 2024, GBV amounted to $21.28 billion, which rose 11% from the prior-year quarter.
The company’s growing investments to strengthen its core services are noteworthy. It has added several features and upgrades to its core service to make its platform more reliable and affordable for guests.
The launch of Guest Favorites, a collection of the most-loved homes on Airbnb based on ratings, reviews and reliability data, is driving the company’s momentum among guests. ABNB has witnessed more than 150 million nights booked at Guest Favorites listings since the launch.
The company’s unveiling of a label feature, which ranks the top-listed properties with a badge, is a plus. It enables customers to choose from a wide range of properties.
Airbnb’s expanding international footprint is a positive. Its deepening focus on under-penetrated or less mature international markets to unlock growth opportunities is noteworthy. The company’s growth in gross nights booked in these markets was more than that in the core markets. It intends to continue investing in less mature markets throughout 2024 and beyond for further growth.
ABNB’s initiative to expand its brand positioning beyond travel accommodations with the global rollout of Airbnb Icons, which is a new category of extraordinary experiences, bodes well.
Airbnb’s commitment to make hosting mainstream is another positive. Its strong investments to grow the size and quality of the host community are noteworthy. The company is expanding use cases, and supporting various kinds of hosts (the ones who share their homes with guests) to attract more hosts globally to its platform. The initiative will help hosts deliver high-quality stays and experiences to guests. Airbnb is raising awareness around hosting in order to make it easier for hosts to get started.
ABNB’s efforts to boost the quality of listings on its platform are benefiting its hosting business. In second-quarter 2024, the company surpassed 8 million active listings, owing to continued growth across all regions and market types. It also removed 200,000 listings that failed to meet its guests’ expectations to deliver enhanced stay experiences.
The company intends to expand its global network and partner with communities to help more hosts join its platform.
Solid Liquidity Supports ABNB’s Shareholder-Friendly Initiative
As of June 30, 2024, cash and cash equivalents, and short-term investments amounted to $11.3 billion compared with its long-term debt of $1.99 billion. The company also generated net cash of $1.1 billion from operating activities and a free cash flow of $1 billion in second-quarter 2024.
A stable balance sheet and strong liquidity position will not only help the company pursue acquisitions but will also enable it to repurchase shares. The company repurchased $749 million of its shares in the same quarter.
Falling Earnings Estimates Do Not Bode Well for ABNB
Airbnb’s strong investments to bolster its key offerings in a bid to deliver enhanced experience to both host and guest communities are expected to drive its top-line growth in the short and the long run.
For the third quarter of 2024, the company expects revenues between $3.67 billion and $3.73 billion, implying year-over-year growth of 8-10% on a reported basis. The Zacks Consensus Estimate for the same is pegged at $3.71 billion, indicating a year-over-year increase of 9.3%.
The consensus mark for 2024 revenues is pegged at $11.04 billion, indicating year-over-year growth of 11.3%.
Macroeconomic headwinds and seasonal impacts are making investors bearish about the stock, which is evident from the downward revision in earnings estimates.
Intensifying competition poses pricing pressure, which does not bode well for ABNB’s margin expansion.
The Zacks Consensus Estimate for third-quarter 2024 earnings is pegged at $2.27 per share, which has moved 8.1% south over the past 30 days. The estimate suggests a year-over-year fall of 5%.
The consensus estimate for 2024 stands at $4.43 per share, indicating a year-over-year decline of 38.8%. The estimate has moved 4.9% south over the past 30 days.
Image Source: Zacks Investment Research
ABNB Stock Does Not Appear Cheap
Airbnb’s near-term prospects remain foggy. The ABNB stock is not so cheap, as the Value Style Score of C suggests a stretched valuation at this moment.
The company’s stock is trading at a premium with a forward 12-month Price/Earnings of 23.75X compared with the industry’s 21X.
Image Source: Zacks Investment Research
Conclusion
Airbnb has been grappling with stiff competition, geo-political tensions and macro headwinds despite its strong core business, expanding global presence and strategic investments.
The company’s stretched valuation and falling estimates are concerning.
Existing investors may consider holding their positions, but new investors should exercise caution and wait for a more favorable entry point.
Airbnb currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.