No one could ignore Airbnb's price drop during morning trading session, as the stock fell to $146.0, logging a -3.0% underperformance of the S&P 500. The stock is still trading within range of its average target price of $152.52, which may prove to be a resistance point to further declines. Analysts have given the Commercial Services stock target prices ranging from 80.0 to 200.0 dollars per share, with an average rating of hold.
The market sentiment on the stock is decidedly optimistic, since Airbnb has a short interest of only 2.8%. This is the percentage of the share float that is being shorted. Each short position represents an investor's expectation that the price of the stock will decrease in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
Another way to gauge the sentiment on Airbnb is to look at the percentage of institutions that are invested in the stock. In this case, 79.2% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
To sum up, Airbnb is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a hold rating, an average amount of shares sold short, and an average number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about ABNB:
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The stock has trailing 12 month earnings per share (EPS) of $7.48
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Airbnb has a trailing 12 month Price to Earnings (P/E) ratio of 19.5 compared to the S&P 500 average of 27.65
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The company has a Price to Book (P/B) ratio of 11.76 in contrast to the S&P 500's average ratio of 4.59
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Airbnb is a Finance company, and the sector average P/E and P/B ratios are 15.89 and 1.76 respectively
