Is Airbnb Stock (ABNB) a Buy After Positive Earnings?

By Kirsteen Mackay

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Airbnb Inc reports outstanding results once again. Is this stock a long-term buy?

Airbnb Inc (NASDAQ: ABNB) reported its Q4 earnings on 15 February, and it was another record quarter for the group. Fresh from completing the best year in Airbnb's history, can the company maintain positive momentum in the months ahead?

What is Airbnb?

Airbnb, Inc. manages and operates short-term property rentals via its online marketplace. Its marketplace model connects hosts and guests online or through mobile devices to book accommodation for one night or longer stays.

The company was founded by Brian Chesky, Nathan Blecharczyk and Joseph Gebbia in 2007 and is headquartered in San Francisco, California.

Over the past year, Airbnb stock has traded between $129.71 and $218.78. Today it hovers around $180.

Q4 Financial Highlights

  • Revenue: $1.5bn (best Q4 ever)

  • Net Income: $55m

  • Adjusted EBITDA: $333m

  • Adjusted EBITDA margin: 22%

  • Gross Booking Value (GBV): $11bn 

This stellar quarter rounded off an exceptional year. Better still, Airbnb management noted the average length of stay is rising. But the company does expect average daily rates (ADR) to moderate in the coming year as it moves to take more control over its fixed and variable costs.

ABNB Financial Overview and Metrics

  • P/BV: 25

  • P/S: 23

  • Forward P/E: 161

  • Market cap: $114bn 

ABNB Stock Reflects Resilient Business Model

After two years of restrictive travel and reigned in spending, consumers are chomping at the bit to escape a humdrum existence. Airbnb is ideally placed to meet this desire. Indeed its 2021 results reflect this. 

Airbnb shows resilience in responding to the changing world of travel. With millions of hosts now registered on the platform, people can travel anywhere in the world and stay in any type of accommodation they desire. Whether that be canal boat, treehouse, yacht, shepherd's hut, cabin, lodge, bungalow, apartment, castle, villa, lakehouse or anything else you can imagine. Guests can travel alone, with friends, family, and even pets. 

Remote work has untethered many people from the need to be in an office, and as a result, people are spreading out to thousands of towns and cities, staying for weeks, months, or even entire seasons at a time. For the first time ever, millions of people can now live anywhere.

Furthermore, nearly 175,000 guests booked long-stay trips for three months or longer. That's an encouraging sign and one that the CEO has decided to adopt. He's now living on Airbnb, traveling the world while working for the foreseeable future.

Is Airbnb Stock a Good Investment?

Over the past year, Airbnb has made more than 150 upgrades and innovations across every aspect of the Airbnb service. It is ramping investment in ensuring guests are catered to with flexibility. Airbnb Experiences are growing in popularity, and the company intends to capitalize on it. 

Management is also focusing on recruiting and retaining happy hosts. 90% of Airbnb hosts are individuals rather than firms, so keeping them sweet is vital to the business's success.

Unfortunately, even the best-run business can have a share price that is overvalued. And Airbnb's financial metrics indicate a costly stock, even as it sits 17% below its 52-week high.

Airbnb stock is one for the watchlist and a potential buy if the share price rerates.

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Topics:
Travel
Industries:
Consumer Discretionary
Companies:
Airbnb

Author: Kirsteen Mackay

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Kirsteen Mackay does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Kirsteen Mackay has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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