What Do You Need to Know About Airbnb (ABNB) Before Investing?

Now trading at a price of $116.2, Airbnb has moved -2.7% so far today.

Airbnb returned gains of 26.0% last year, with its stock price reaching a high of $154.95 and a low of $81.91. Over the same period, the stock outperformed the S&P 500 index by 9.0%. More recently, the company's 50-day average price was $130.6. Airbnb, Inc., together with its subsidiaries, operates a platform that enables hosts to offer stays and experiences to guests worldwide. Based in San Francisco, CA, the large-cap Consumer Discretionary company has 6,811 full time employees. Airbnb has not offered a dividend during the last year.

The Business Has Negative Margins on Average:

2020 2021 2022 2023
Revenue (MM) $3,378 $5,992 $8,399 $9,088
Gross Margins -106% 7% 21% 22%
Operating Margins -106.0% 7.0% 24.0% 27.0%
Net Margins -136.0% -6.0% 23.0% 30.0%
Net Income (MM) -$4,585 -$352 $1,893 $2,685
Net Interest Expense (MM) $130 -$304 $25 -$16
Depreciation & Amort. (MM) $126 $138 $81 $46
Free Cash Flow (MM) -$777 $2,288 $3,405 $3,894
Capital Expenditures (MM) $37 $25 $25 $29
Net Current Assets (MM) $1,327 $3,453 $4,383 $3,923
Long Term Debt (MM) $440 $1,983 $1,987 $1,989
Net Debt / EBITDA 1.67 -2.62 -0.88 0.87

Airbnb has a pattern of improving cash flows, low leverage, and growing revenues and decreasing reinvestment in the business. However, the firm suffers from slimmer gross margins than its peers and consistently negative margins with a positive growth rate. Finally, we note that Airbnb has positive expected EPS Growth.

Airbnb's P/B and P/E Ratios Are Higher Than Average:

Airbnb has a trailing twelve month P/E ratio of 38.4, compared to an average of 22.33 for the Consumer Discretionary sector. Based on its EPS guidance of $3.99, the company has a forward P/E ratio of 32.7. Furthermore, Airbnb is likely overvalued compared to the book value of its equity, since its P/B ratio of 8.26 is higher than the sector average of 3.12. The company's shares are currently trading 362.4% above their Graham number. Overall, Airbnb's lofty valuation in terms of earnings and assets is to some extent attenuated by its strong cash flow trend and reasonable levels of debt.

Airbnb Has an Analyst Consensus of Some Upside Potential:

The 30 analysts following Airbnb have set target prices ranging from $70.73 to $174.47 per share, for an average of $134.18 with a hold rating. As of April 2023, the company is trading -2.7% away from its average target price, indicating that there is an analyst consensus of some upside potential.

Airbnb has an average amount of shares sold short because 7.2% of the company's shares are sold short. Institutions own 68.3% of the company's shares, and the insider ownership rate stands at 3.35%, suggesting a large amount of insider shareholders. The largest shareholder is Vanguard Group Inc, whose 6% stake in the company is worth $2,781,395,851.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.