Airbnb shares fell by -2.0% during the day's afternoon session, and are now trading at a price of $147.59. Is it time to buy the dip? To better answer that question, it's essential to check if the market is valuing the company's shares fairly in terms of its earnings and equity levels.
Airbnb Is Fairly Priced to Earnings but Overpriced Compared to Its Book Value:
Airbnb, Inc., together with its subsidiaries, operates a platform that enables hosts to offer stays and experiences to guests worldwide. The company belongs to the Consumer Discretionary sector, which has an average price to earnings (P/E) ratio of 22.96 and an average price to book (P/B) ratio of 4.24. In contrast, Airbnb has a trailing 12 month P/E ratio of 18.0 and a P/B ratio of 10.34.
When we divideAirbnb's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.87, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
The Company Has a Positive Net Current Asset Value:
| 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|
| Revenue (MM) | $3,378 | $5,992 | $8,399 | $9,601 |
| Revenue Growth | n/a | 77.38% | 40.17% | 14.31% |
| Operating Margins | -106% | 7% | 21% | 23% |
| Net Margins | -136% | -6% | 23% | 56% |
| Net Income (MM) | -$4,585 | -$352 | $1,893 | $5,460 |
| Net Interest Expense (MM) | -$172 | -$438 | -$24 | -$17 |
| Depreciation & Amort. (MM) | $67 | $138 | $81 | $41 |
| Earnings Per Share | -$16.14 | -$0.57 | $2.79 | $8.27 |
| EPS Growth | n/a | 96.47% | 589.47% | 196.42% |
| Diluted Shares (MM) | 284 | 616 | 680 | 660 |
| Free Cash Flow (MM) | -$777 | $2,288 | $3,405 | $4,246 |
| Capital Expenditures (MM) | $37 | $25 | $25 | $38 |
| Current Ratio | 1.73 | 1.95 | 1.86 | 1.78 |
Airbnb has rapidly growing revenues and increasing reinvestment in the business and generally positive cash flows. Additionally, the company's financial statements display a strong EPS growth trend and a decent current ratio of 1.78. Furthermore, Airbnb has weak operating margins with a positive growth rate.
