Is Airbnb (ABNB) Undervalued Despite Its Analyst Rating?

Airbnb may be undervalued with mixed growth prospects, but the 30 analysts following the company give it an rating of hold. Their target prices range from $75.0 to $185.0 per share, for an average of $133.83. At today's price of $126.27, Airbnb is trading -5.65% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

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 regular dividend during the last year.

Airbnb has a trailing twelve month P/E ratio of 15.4, compared to an average of 22.33 for the Consumer Discretionary sector. Considering its EPS guidance of $4.42, the company has a forward P/E ratio of 28.6.

The average compound growth rate of the company's last 4 years of reported earnings per share is 5.5% (the company doesn't issue forward EPS guidance). On this basis, the company's PEG ratio is 2.81, which suggests that it is overpriced.

Airbnb is also overpriced compared to its book value, since its P/B ratio of 8.84 is higher than the sector average of 3.12. The company's shares are currently 379.6% above their Graham number, which suggests that they are not trading at a fair value in terms of earnings and net assets.

If analysts are giving the stock a bad rating, it's likely that they are looking beyond simple valaution metrics and attempting to forecast the company's growth potential. For example, Airbnb has narrow margins as you can see in the financial summary below.

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
Earnings Per Share -$16.14 -$0.57 $2.78 $3.86
Diluted Shares (MM) 284 616 680 696
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 0.83
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.