Airbnb Stock Looks to Be in Full Recovery Mode

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While still far below their 52-week high, shares of Airbnb (NASDAQ:ABNB) appear to have stabilized amid ongoing market turmoil. 

meone holds the Airbnb logo in front of Dresden, Germany landscape. ABNB stock.

Source: AlesiaKan / Shutterstock

The San Francisco-based homestay and vacation rental company’s stock is currently trading at $173.41, which is 18.4% below its 52-week high of $212.58.

However, over the past six months, ABNB stock is up about 3% and is now trading at the same level it was at at the start of this year. Best of all for investors, the share price appears to have bottomed at $131.59 on Mar. 7 and has since risen 31.7% to its current level.

With demand for travel growing stronger and Covid-19 restrictions being eased around the world, Airbnb’s stock could continue to benefit from tailwinds throughout the remainder of 2022.

Surpassing Pre-Pandemic Levels

Airbnb has been rebounding strongly from the ravages of the pandemic, when global travel restrictions seriously hurt its business. For the fourth quarter (Q4) of 2021, the company’s revenue rose 78% from the same period of 2020 to reach $1.5 billion.

The strength of the company’s recovery was underscored by the fact that Airbnb’s 2021 revenue was 38% higher than in 2019, before the Covid-19 pandemic occurred. The company also reported that its gross bookings that measure the total value of reservations at its properties around the world reached $46.9 billion in 2021, up 23% from pre-pandemic 2019. This rebound has added support to ABNB stock.

Equally beneficial to ABNB stock is the fact that the company is now profitable. Airbnb has now delivered positive earnings results in two consecutive quarters — Q3 and Q4 2021. The company being profitable adds another positive element for Airbnb and should give investors reason to take another look at the stock.

In Q4 2021, Airbnb reported net income of $834 million, up from $267 million in the same quarter of 2019, further demonstrating the strength of its balance sheet. In Q4, the company’s earnings per share (EPS) came in at $0.08, which was 166% higher than the EPS of $0.03 that analysts on Wall Street had expected.

Other Bullish Signs

Other positive signs that should peak investors’ interest is the fact that Airbnb says the average trip length at the properties listed on its portal has increased by an average of 15% over the past two years, “with stays of over seven days accounting for over half of all gross nights booked.”

Additionally, the selloff in ABNB stock throughout much of last year has improved the company’s valuation. Airbnb’s stock is now selling at a price-to-free-cash-flow ratio of 43, down from more than 240 in early 2021 and the lowest level ever since it became a public company. Also, Airbnb stock is now trading at a price-to-sales ratio of 18.04, which is in line with most travel-related stocks, such as hotels and casinos.

Apart from its financials and various growth metrics, Airbnb has also earned a lot of public goodwill for its response to Russia’s invasion of Ukraine. Since Russia began attacking Ukraine in late February, Airbnb has waived its guest and hosting fees for bookings in Ukraine. People around the world have been booking Airbnb stays in Ukraine with no plans to go as a means of providing financial help to ordinary people living in the besieged country. More than $2 million was raised for local Ukrainians through Airbnb as 61,000 bookings were made in the country, with more than half of those bookings coming from the U.S. Airbnb has earned a lot of positive press from the campaign.

Among 30 analysts who cover ABNB stock, the median price target on the shares is $205, implying an 18.2% upside in the months ahead.

Consider a Position in ABNB Stock

After a difficult few years, Airbnb seems to have turned a corner. The company is now profitable, its revenue and net income are above pre-pandemic levels, its future bookings and lengths of stay are trending in the right direction, and it has endeared itself to the public with its support of Ukraine. Best of all, the share price appears to have bottomed and has climbed in recent weeks.

With the wind at its back, now might be a good time for investors to consider taking a position in the homestay company, especially as the consensus view appears to be that its share price has more room to run. ABNB stock is a buy.

Disclosure: On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/03/abnb-stock-looks-to-be-in-full-recovery-mode/.

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