Sep. 03, 2023 9:00 AM ET Airbnb, Inc. (ABNB)
- Airbnb buyers received a pleasant surprise as the news of ABNB’s impending addition to the S&P 500 helped it recover most of its August losses.
- It has strengthened the market’s confidence in Airbnb’s growth story as the alternative accommodation leader as it continues to gain operating leverage.
- Despite expectations of slowing revenue growth, Airbnb’s asset-light model is expected to drive significant margin accretion and profitability growth.
- I argue why bearish views on ABNB are no longer defensible, as buying sentiments point to an impending recovery.
This article discusses Airbnb, Inc. (NASDAQ: ABNB) and its recent addition to the S&P 500 index, highlighting the following key points:
- Positive Market Response: The news of Airbnb’s inclusion in the S&P 500 has had a positive impact on the company’s stock, helping it recover most of its losses from August.
- Confidence in Growth Story: This addition to the S&P 500 reinforces investor confidence in Airbnb’s growth as a leader in the alternative accommodation sector.
- Profitability Growth: Despite expectations of slowing revenue growth, Airbnb’s asset-light business model is expected to drive significant margin growth and profitability in the medium term.
- Change in Analyst View: The author, JR Research, had previously given a “Sell” rating to Airbnb but acknowledges that buying sentiment and recent developments no longer support a bearish view on the company.
- Technical Analysis: The article mentions that despite a previous peak in July and a recent decline in the stock’s price, investors have remained confident in Airbnb, and recent buyers have been rewarded.
- S&P 500 Inclusion: Airbnb’s addition to the S&P 500 index is seen as a significant development, indicating that the company meets strict criteria and may attract passive investment funds.
- Revenue and Profitability Outlook: While revenue growth is expected to slow down as Airbnb matures, the company’s adjusted EBITDA is projected to increase, demonstrating its ability to maintain profitability.
- Growth Focus: Airbnb’s management emphasizes a growth-oriented approach, and its growth grade suggests it should be considered a growth investment.
- Valuation Considerations: The article notes that Airbnb’s valuation is relatively high, but strong buying sentiment suggests potential opportunities for investors, especially during steep pullbacks.
- Investment Rating: The author maintains a “Hold” rating on Airbnb, suggesting a neutral stance, with the possibility of a rating change in the future.
The article advises investors to conduct their own due diligence and not solely rely on the information provided as financial advice. It also emphasizes that the rating is not intended for timing specific entry or exit points unless otherwise specified.
