Airbnb Stock Is a Buy As It Takes Off With the Summer Travel Season

  • Airbnb (ABNB) stock is starting to climb higher as the summer travel season gets underway.
  • The San Francisco-based company's bookings are now back to pre-pandemic levels and growing.
  • Many analysts expect Airbnb to turn profitable this year as its revenue and profits swell with increased travel demand.
ABNB stock - Airbnb Stock Is a Buy As It Takes Off With the Summer Travel Season

Source: Kaspars Grinvalds / Shutterstock

With leisure travel taking off around the world, Airbnb (NASDAQ:ABNB) stock could be one of the better investments of the summer. Indications are growing that travel is finally rebounding this summer from the ravages of the global pandemic. And that is great news for Airbnb, the world’s biggest online marketplace for homestays and vacation rentals, which is counting on a huge rebound in bookings over the coming months.

Already, the anticipated rebound in travel is starting to move the company’s stock higher. Since the start of the Memorial Day weekend that officially kicks off summer in the U.S., ABNB stock has gained 9%. While the share price remains down 30% on the year, further gains can be expected should this summer’s travel season pan out as industry experts predict.

Ticker Company Current Price
ABNB Airbnb $119.18

ABNB Stock and the Travel Rebound

According to Deloitte’s 2022 summer travel survey, nearly half (46%) of all Americans are planning a trip between now and Labor Day, the highest proportion since before the Covid-19 pandemic, with nearly all the travel involving stays in some form of paid lodging, such as hotels and rental properties.

That’s slightly more than 150 million people in the U.S. who are planning a summer getaway this year. Also, the World Travel & Tourism Council (WTTC) has forecast that U.S. travel and tourism this summer will exceed pre-pandemic levels by 6.2%, accounting for almost $2 trillion in U.S. gross domestic product (GDP). In Europe, the council’s data shows that summer 2022 bookings have surpassed last year by 80%. And Peter Kern, Chief Executive Officer of online travel company Expedia Group (NASDAQ:EXPE), has said that “Summer 2022 will be the busiest travel season ever.”

A strong rebound in travel, both in the U.S. and abroad, are already reflected in the earnings of San Francisco-based Airbnb, which issued a blowout quarterly print at the start of May. ABNB showed its revenue was 70% higher than a year earlier. The company, which went public in December 2020 during the depths of the Covid-19 crisis, reported that 102.1 million nights and experiences were booked on its platform during this year’s first quarter, surpassing pre-pandemic levels and beating Wall Street forecasts.

Best of all, Airbnb’s net loss in the quarter declined to just $19 million from $1.2 billion a year ago when travel was still in the doldrums due to the pandemic.

Big Expectations

Looking ahead, Airbnb provided exceptionally strong forward guidance, saying it now expects revenue in the second quarter of between $2.03 billion and $2.13 billion, which would represent 52% annualized growth. The company also said that its bookings for this summer are 30% higher than in summer 2019 before Covid-19, and that long-term stays of 28 days or more remain its fastest-growing booking segment.

Following the strong earnings and bullish outlook, multiple analysts have rerated ABNB stock in recent weeks. Among 30 analysts who cover Airbnb, the median price target on the company’s shares is currently $185, implying 55% upside from current levels. Many analysts now expect Airbnb to turn profitable this year as the company’s bookings and revenue accelerate.

Airbnb is doing its best to capitalize on the growing travel boom, redesigning its online platform with changes that include a new way for people to search, the option to split stays between different homes, and enhanced protections for guests who book stays with Airbnb. The company has also introduced several updates and enhancements to its popular app.

The company also generated headlines recently with the news that it is shutting down its operations in China amid increasing domestic competition and the country’s ongoing “zero tolerance” Covid-19 policy that has led to new restrictions in recent months. Airbnb says it has removed some 150,000 homestay listings in China as a result of its exit from the Asian nation.

Buy ABNB Stock Before It Takes Off

Airbnb has struggled since its initial public offering (IPO) in late 2020 as Covid-19 outbreaks grounded its global operations to a halt. However, things look to finally be reversing for the company in a big way as travel surges back to pre-pandemic levels.

With the summer season officially underway, and Airbnb’s bookings in high gear, ABNB stock looks poised for a run in coming months. Investors on the hunt for gains in a down market should consider taking a position in Airbnb stock before it takes off this summer. As people get out on the road and take to the skies again in search of a vacation, ABNB stock is a buy.

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.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/abnb-stock-is-a-buy-as-it-takes-off-with-the-summer-travel-season/.

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