- Airbnb (ABNB) reported blockbuster first-quarter results as travel rebounds worldwide.
- The company has also just redesigned its platform and app, making several notable improvements.
- Down 36% year-to-date, ABNB stock presents a compelling buy the dip opportunity at current levels.
Source: Diego Thomazini / Shutterstock
Pent-up travel demand looks to finally be paying off for Airbnb (NASDAQ:ABNB) stock.
ABNB stock has been pulled down this year along with the entire market, having fallen 36% since January to $110.58 a share.
The company’s share price has now declined 45% over the past six months. However, the slump does not reflect the improving picture at Airbnb, whose business is picking up markedly as the pandemic recedes and people all over the world look to get out and travel again. At the start of May, the San Francisco-based homestay and vacation rental company reported blowout quarterly results that showed its revenue was up 70% from a year earlier.
Revenge travel among consumers who have been sheltering in place at home for the better part of two years appears to be a real thing judging from Airbnb’s first quarter results.
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The company reported that 102.1 million nights and experiences were booked on its platform during this year’s first quarter, surpassing pre-pandemic levels and beating Wall Street forecasts by a country mile. Revenue during Q1 surged 70% from the year earlier period to $1.51 billion, which was ahead of the $1.45 billion consensus forecast of analysts. Better still, Airbnb’s net loss in the quarter declined to $19 million from $1.2 billion a year ago.
The forward guidance issued by Airbnb was equally strong, with the company telegraphing that it now expects second quarter revenue between $2.03 billion and $2.13 billion, which is better than the average analyst estimate of $1.96 billion, and would be good for 52% annualized growth. The company also said that its bookings for this summer are 30% higher than in summer 2019 before the pandemic, and that long-term stays of 28 days or more remain its fastest-growing booking.
The bullish results and forward guidance sent ABNB stock up 6% immediately after they were announced. But the company’s share price has been pulled lower in recent weeks along with the entire market.
In addition to its improving financials, Airbnb is capitalizing on the resumption of travel by redesigning its online platform, ushering in “the biggest change to Airbnb in a decade,” according to company chief executive officer (CEO) Brian Chesky. The changes include a new way for people to search, the option to split stays between different homes, and enhanced protections for guests who book stays with Airbnb. The company has also introduced several updates and enhancements to its app.
On top of the enhancements to its platform, Airbnb made headlines by telling its global workforce that they can work remotely indefinitely and from any location in the world they choose.
All the improvements and positive news has analysts scrambling to rerate ABNB stock. UBS (NYSE:UBS) recently raised its price target on the stock to $185 from $178, implying 68% upside. Credit Suisse (NYSE:CS) hiked their price target on Airbnb stock to to $190 from $185, suggesting gains of up to 73% in the coming year. Among 30 analysts who cover Airbnb, the median price target on the company’s shares is currently $190. Many analysts expect Airbnb to turn profitable later this year as the company’s bookings and revenue accelerate over the summer months and heading into autumn.
Buy the Dip in ABNB Stock
The pandemic devastated Airbnb’s business and stock.
However, the company is emerging from the ravages of Covid-19 stronger than ever thanks to robust demand for its services among travelers. The improving earnings, platform and app redesigns, and bullish analyst forecasts make a compelling case to take a position in Airbnb stock now before the share price inevitably rises. Once the current market selloff ends and stocks reverse higher, Airbnb is sure to be a beneficiary.
For these reasons, ABNB stock is a buy.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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