Airbnb is a buy, could become the largest Western travel company, says Bernstein
Airbnb is on track to become the largest travel platform in the West over the next five years, making it a good entry point for investors, according to Bernstein. Richard Clarke launched Airbnb as an outperformer with a price target of $143, indicating about a 30% upside from Tuesday’s close of $110.81. The stock traded slightly lower in pre-market. He sees the vacation rental industry valued at around $150 billion, noting that the space could see high-single-digit growth in the future. He also said Airbnb is well positioned to expand into other markets, including hotels, experiences and extended stays. “Airbnb is a unique travel company, with a triple moat of an ambitious brand, a unique product set, and a loyal customer base – all packed into one of the fastest swim lanes in travel,” Clarke said in a note to clients Tuesday. Clarke said Airbnb is expected to be the largest western travel platform by 2027, while the consensus is for the company to achieve that feat by 2029. It is also expected to be the most popular online travel agency. profitable within two years, beating competitors such as Expedia and Booking. com. Bernstein sees a record third quarter that beat estimates of overnight stays exceeding 100 million by 5%. Airbnb was able to grow while cutting marketing costs, which speaks to the strength of the brand, he said. However, there are concerns about supply and meeting demand as the company enters new markets. There’s also been talk of Airbnbs as “hotels with drudgery” and complaints about extra fees, Clarke said. The looming threat of greater regulation remains, though Clarke said those concerns have subsided and the platform has shown its ability to preform regardless. And Airbnbs, despite being considered “good value”, are still more expensive than hotels, which are currently still depressed by the pandemic. But “any modest backlash against Airbnb doesn’t stifle demand either,” Clarke said. And now is a good time to buy the stock given its “attractive” entry point. “Even if you have a negative outlook on travel demand, we would consider Airbnb the best stock to own given its more defensive stance, faster growth and more attractive valuation on a 4-year forward multiple. “, he added. Airbnb shares have struggled this year, losing 33%. – CNBC’s Michael Bloom contributed to this report.
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