Airbnb (NASDAQ:ABNB) has been mixed lately as fundamentals clash with aggressive selling and poor technicals. On the one hand, travel trends are improving considerably around the world. On the other hand, ABNB stock remains 27% below its all-time high as a bear market rattles growth stocks.
Not only is Airbnb outperforming most of its growth-stock peers, but it’s down just 6.8% so far on the year. That’s outperforming both the S&P 500 and the Nasdaq. Now the question becomes, can ABNB stock fight through the selling pressure of the broader market? That’s in light of improving travel trends we’ve seen from other companies.
United Airlines (NASDAQ:UAL) recently issued its strongest second-quarter outlook ever. CEO Scott Kirby said, “The demand environment is the strongest it’s been in my 30 years in the industry.” American Airlines (NASDAQ:AAL) was also bullish when it reported its outlook.
According to American Express, travel spend is outpacing pre-pandemic levels. The company said, “86% of consumers expect to spend more or the same on travel in 2022 compared to a typical pre-pandemic year.” Further, in its most recent quarter, Amex reported that travel and entertainment spending climbed 121% year-over-year. It “essentially reached prepandemic levels for the first time in March, driven by strength in consumer travel.”
Visa Chairman and CEO Alfred F. Kelly, Jr. was also optimistic in his outlook. He said, “While the geopolitical environment remains uncertain, we expect continued growth driven by a robust travel recovery and through the enablement of traditional and newer ways to pay globally.”
All in all, it looks like travel is ramping back up for the summer season, which is good news for Airbnb.
Earlier this week, Jefferies analyst John Colantuoni assigned a $225 price target and a “Buy” rating on ABNB stock. From current levels, that represents about 31% upside.
While the travel trends are no doubt picking up pace — and that likely includes for Airbnb — the stock market is the biggest hurdle for the share price right now. Should the equity markets continue to swoon and if growth stocks remain under pressure, then it’s likely that Airbnb shares will may struggle as well. At the very least, these negative catalysts will act as a weight on the stock.
However, what happens if these two observations dissipate? Say growth stocks bounce and the market volatility lets up a bit. Then we could see these issues flip from headwinds to tailwinds. If combined with Airbnb’s fundamental improvements, we could see a significant move higher in ABNB stock.
On the date of publication, Bret Kenwell 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.