Can Airbnb Inc (ABNB) Weather the Current Market Assessment?
In recent news, BMO Capital Markets initiated a “Market Perform” rating on Airbnb (ABNB) stock with a $134 target. However, our analysis at Stock Target Advisor (STA) varies slightly with the proposed outlook. STA’s stock rating is a buy with a target price of $132, portraying a projected price change in 12 months by -5.77%. On average, market analysts predict the Airbnb Inc stock price to reach USD 138.85 in the following 12 months.
Is Airbnb Inc’s Business Model Profitable?
Airbnb Inc operates a pioneering platform that bridges hosts with guests for a variety of stays and experiences on a global scale. In a review of their financial performance over the trailing 12 months, Airbnb Inc demonstrated solid profit-making capabilities. The company made a 1-year capital gain of 56.97%, placing it in the 80% percentile ranking within its sector. Over the same period, it produced a total return of 56.97%.
Besides its short-term gains, Airbnb Inc’s five-year growth analysis indicates sustainable growth in future potential. Over the past five years, the company recorded an impressive 227.87% growth in revenue, placing it at the pinnacle of its sector, with a 100% percentile ranking. Earnings growth in the same period was an astounding 2802.51%, retaining its 100% percentile ranking within its sector.
How Does Airbnb Inc Rank Against its Competitors in Terms of Profitability and Valuation?
When examined through the lens of profitability ratios, Airbnb Inc’s numbers are impressive. The firm achieved a return on assets (RoA) of 7.5%, a return on equity (RoE) of 74.47%, and a return on invested capital (RoIC) of 23.85%, placing it in the 90%, 100%, and 80% sector percentile rankings respectively. The firm’s debt-to-equity ratio stands at 35.74%, positioning it in the 33.33% percentile ranking within its sector.
In terms of valuation ratios, Airbnb Inc’s position within its sector is also noteworthy. The firm’s price-to-earnings ratio is 16.52, awarding it a sector percentile ranking of 100%. However, it scores relatively lower with a price-to-book ratio of 9.55 and a price-to-cash flow ratio of 25.41, securing it percentile rankings of 50% and 20%, respectively.
How Does Airbnb Inc Fare Among Market Analysts and Within its Sector?
Airbnb Inc has 26 covering analysts, and the average rating for the stock is hold. The average analyst target price stands at $138.85, with a maximum of $174 and a minimum of $100. When compared to the broader sector – travel services– Airbnb outperforms its peers. The sector’s average analyst rating is a strong buy; however, the STA’s rating for the sector is slightly bearish with an average 1-month return of 4.07%. The largest stocks in this sector are Airbnb Inc along with Booking Holdings Inc, Trip.com Group Ltd ADR, Expedia Group Inc., and MakeMyTrip Limited.
Airbnb’s Financial Results: A Glimpse at the Future?
Airbnb’s quarterly results for the period ending September 30, 2023, recorded a revenue of $3.4 billion and a net income of $4.37 billion, translating into a profit margin of 128.76% and an EBIT margin of 49.6%. In contrast, the annual results for the year ending December 31, 2022 demonstrated a revenue of $8.4 billion and a net income of $1.89 billion, yielding a profit margin of 22.54% and an EBIT margin of 21.45%.
Should Investors Consider Airbnb Inc?
Despite the “Market Perform” rating initiated by BMO Capital Markets with a $134 target, the financial analysis and market performance detailed above provide significant insight into Airbnb Inc’s potential. Airbnb has demonstrated growth potential and a track record of strong financials, which could present long-term investment opportunities for proactive investors. However, as with all investment decisions, potential investors should conduct personal research and consider multiple factors before making choices.
