Airbnb Stock is a Buy After Blockbuster Earnings

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  • Airbnb (ABNB) shares slid almost 6% on Monday for a fresh 2022 (and all-time) close.
  • The company released stellar first-quarter results less than two weeks ago, showing massive revenue growth and guidance for the second quarter that beat analysts’ expectations.
  • Airbnb still faces challenges, but investors looking for long-term growth opportunities should consider ABNB shares.

Source: Diego Thomazini / Shutterstock

Airbnb (NASDAQ:ABNB) may have gotten off to a good start in 2022, but the same certainly cannot be said for ABNB stocks.

May 3, the company has published its results for the first quarter of 2022, which showed that Airbnb is stronger than ever. Revenue for the quarter was $1.5 billion. That’s a 70% year-over-year increase and perhaps more importantly, it’s an 80% increase from the pre-pandemic first quarter of 2019. The company’s net loss in the quarter narrowed to $19 million. That’s $1.2 billion better than Q1 2021 and $273 million better than Q1 2019. Free cash flow of $1.2 billion is an all-time high for the business.

Besides, the company released second-quarter revenue guidance of $2.03 billion to $2.13 billionexceeding analysts’ expectations.

The market reaction? Airbnb stock surged the next day. But it’s 2022, so it was sliding fast again. On May 16, it closed at $114.44, a new all-time low. With ABNB stock down a third year-to-date and its February 2021 high closed 44%, there are opportunities for long-term growth investors.

Teleprinter Company Current price
ABNB Airbnb $110.45

Travel is resuming and Airbnb is more popular than ever

Airbnb suffered early in the pandemic as lockdowns and fear of Covid-19 decimated travel. However, the worst has long been in the rearview mirror. Globally, travel has resumed. Recent waves of Covid-19 variants have delayed a full recovery, but looking global airline revenue projections for 2022 vs. 2019, progress is being made. Additionally, Airbnb has been very successful in capitalizing on the remote work trend. Strong growth in long-term rentals (28 days or more) has more than offset a travel sector that is not yet fully recovered.

Even during the pandemic, Airbnb and its business model have had strong support. Scott Galloway is a professor of marketing at New York University’s Stern School of Business. In October 2020, he wrote“I believe that this time next year, Airbnb will be the most valuable hotel company in the world and one of the top 10 strongest brands in the world… The SF platform will probably be worth more than the three largest hotel companies combined.”

He was a little off in that prediction – by my calculations, the three largest hotel chains currently have a combined market capitalization of around $98 billion, compared to Airbnb’s around $73 billion. But it’s 2022. Everything associated with the tech sector has been disappointing in its performance.

Either way, Galloway was right that Airbnb has managed to continue building a globally recognized brand. These Q1 earnings don’t just show that people are spending more on Airbnb rentals than ever before. They also show that more people than ever are joining the platform to rent out their property as hosts. And this growth is not limited to cities. According to the company, non-urban active listings in North America increased 21% in the quarter.

As travel continues to pick up and Airbnb listings continue to grow, revenue growth will continue. Profitability is approaching. The case for buying ABNB shares at their current discounted price is strong.

Challenges remain, some more difficult than others

Anyone considering investing in ABNB shares should be aware that the company faces some challenges. In the short term (hopefully), the challenges are the war in Ukraine and the ongoing waves of Covid-19. Macroeconomic headwinds are also at play. If inflation and interest rates trigger a recession, travel will certainly suffer.

Longer term, Airbnb’s business model continues to suffer setbacks. Among the issues facing the company are accusations that it is causing rental housing shortages in cities, violent crowds at party rentals and concerns about Airbnb. hosts monitor guests with hidden cameras.

Should you buy ABNB shares?

If, like Professor Galloway, you think Airbnb is destined to be a global hospitality behemoth that eclipses the biggest hotel chains, then ABNB stock at current prices is a definite buy. Just be aware that this Portfolio Grader-rated “B” stock is still facing a series of challenges that could impact its value.

As of the date of publication, neither Louis Navellier nor the member of the InvestorPlace research staff principally responsible for this article holds (directly or indirectly) any position in the securities mentioned in this article.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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