Airbnb Stock Forecast: The Stock is a Lucrative Buy After Recent Sell off.
Airbnb Stock Forecast: Latest Price
Airbnb Stock Forecast: Stock Performance Chart
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Airbnb Stock Forecast: Support and Resistance
Airbnb Stock Forecast: Latest Video
Airbnb Stock Forecast: Factors that can lift the stock
- Airbnb Business Model- The travel industry suffered a setback on the backdrop of Covid 19 and travel restrictions were imposed everywhere globally. Airbnb Inc was also victim of global slowdown in tourism industry. But, since last year, it is recovering well as people are itching to travel as lockdowns and restrictions are lifted across the world. Recently, MasterCard said that cross border travel is hitting the pre pandemic levels and that is something very positive for Airbnb Inc. Another positive factor that distinguishes Airbnb from traditional hotels is its business model, as budget conscious travelers will stick to the short term rentals instead of expensive hotels and on other hand, hosts will also consistently rent out the properties in lieu of passive income. Also, Airbnb is shielded from rising costs of commodities like fuel and labor which effect companies like Uber Technologies and Lyft and that has helped Airbnb to sail through the inflation fears in United States. Also, the flexibility given by employers to work from anywhere has acted as a boon for Airbnb and average trip length has increased 15% with stays of more than seven days constituting almost half of the gross night booked, and all this has led to excellent recovery in quarter results.
- Airbnb Strong First Quarter Results – Airbnb announced stellar first quarter FY 2022-23 results on May 3rd 2022. The results beat Wall Street expectations in both top and bottom lines. It reported revenue of $1.51 billion and loss of $0.03 per share against market expectation of revenue of $1.45 billion and loss of $0.29 per share. In totality 102 million nights and experiences were booked which is all-time high for the company. The important factor is that not only number of nights increased, but also the average duration of stay and average price for those stay is increasing too. The growth on multiple fronts boosted free cash flow (FCF) which increased 146% to touch new record of $1.2 billion in the first quarter. Its total cash and cash equivalents increased about 40% to $9 billion. These results are significant not only because it did beat market estimates, but also it crossed the pre pandemic level revenues and bookings. All these factors motivated the management to upgrade the guidance of second quarter and full fiscal year.
- Revised Guidance for Second Quarter and Full Year – On the backdrop of strong quarter results, management revised future guidance. Company now expects that revenue will rise 56% to 64% YoY in the second quarter. The revenue should fall between $2.03 billion and $2.13 billion. The Wall Street analysts also adjusted their estimates post conference call for full year. Current estimates are nearly doubled from the earlier estimates three months ago. Earlier, the full year earnings estimates were $0.97 for full year 2022 and $1.67 for FY 2023 per share, which has been revised to $1.92 per share for current fiscal year and $2.49 per share for FY 2023.
- The Effect of Russia- Ukraine War – While Russia Ukraine war had a negative impact on almost all industries across the globe, and it worst hit the tourism industry but there was kind of a positive influence on Airbnb Inc. The estimates of second quarter are upgraded even if Russia- Ukraine war disrupts the market. The reason is that company pointed out in first quarter that users booked Airbnb rentals in Ukraine even if they did not intend to travel there. It was seen as a way to donate money to Ukraine hosts. As a result of this trend, 600,000 nights were booked in Ukraine during first quarter at a gross booking value of $20 million. The main highlight in the above fact is that it shows how it can overcome geopolitical tensions in more unconventional ways and create revenue.
- Available at Cheaper Valuations – Finally, the fact remains that Airbnb is down 28% in last one-month despite stellar performance in quarter results. Growth stocks like this are judged from price to sales ratio and Airbnb traded at a P/S ratio of 16, which is almost all time low since it went public in 2020. In other words, stock price has come down to where it began trading post IPO, but sales have increased almost 80% in this timeframe.
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Airbnb Stock Forecast: Factors that can take it further down in future
- Number of Hosts are constant – Airbnb is like a link between hosts and guests and is heavily dependent on number of hosts. To further increase the revenue, it is but mandatory to increase number of hosts. But the problem with Airbnb is that number of hosts have stuck to 4 million since it began publicly trading. If number of hosts do not increase in future, profitability and revenue can suffer, as the recovery we are witnessing is due to tendency of people to compensate for the Covid times by going out more and more, once this normalizes, it is of paramount importance to add hosts constantly to offer new staying locations to guests.
- Bad Global Cues and Inflation fears- Finally, it seems that bear market has hit the United States. In last six months, Nasdaq has fallen 26%. An index is in correction mode till it falls 25%, and it enters the bear territory if it falls above 30%. The kind of fall, we are witnessing recently has only been seen at the times of Lehman Brothers collapse and during pandemic times of Covid 19. During this times, every another stock corrects irrespective of the fact that it is performing well on the financial front. Same is the case with Airbnb Inc. It has fallen 40% in last six months and about 28% in last 30 days. There is no certainty that when this period will reverse and market will reward the better performing companies. In the wake of bad global cues, Airbnb stock can further go down.
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Airbnb Stock Forecast: Conclusion
It is true that Airbnb has corrected 40% in last six months, but that itself presents a golden opportunity to enter this growth stock. The company is further expected to benefit from the spring and summer season. Further, management is coming with new features like “I’m Flexible” that drives the guests to less popular locations and increase the quantum of booking.
Airbnb has strong fundamentals, good management and a great business model and recent fall due to external factors presents an opportunity to load up this growth stock, but do expect a further fall from here in the short term due to sell off in global markets.
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