Airbnb Stock is a pandemic recovery game
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Travel platform Airbnb (NASDAQ:ABNB) marked one of the largest Initial Public Offerings (IPOs) by market cap in 2020. However, ABNB’s stock growth has been mostly stable due to the uncertainty surrounding travel demand and its high price tag. initial public offering.
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These demand trends are expected to improve as the pandemic is mitigated. Airbnb has an unmatched business model with excellent competitive strengths, making it a solid Covid-19 recovery game.
ABNB stock has seen a negative trend over the past three months, losing around 20% of its value. It has been a rough time in general for growth stocks like ABNB. The stock is currently trading at a 16.5% discount to analyst price targets.
Moreover, it is also trading at a low price compared to other top growth stocks. For example, lemonade (NYSE:LMND) stocks have an enterprise value to futures sales ratio of 35 times, while shares of ABNB are around 15 times. Therefore, this is a great opportunity to buy stocks cheaply.
Pandemic recovery may increase ABNB stock
Airbnb has had a difficult 2020 with the rest of the hospitality industry. Global tourism saw nearly a billion fewer international travelers last year due to Covid-19. However, as more people get vaccinated, pent-up demand for global travel is expected to rebound. In the United States, which is Airbnb’s biggest market, 49% of the population is fully vaccinated.
Recreational demand is expected to pick up first, which should greatly benefit Airbnb. The pandemic has boosted travel to small urban and rural areas. Airbnb’s rural share has improved significantly, from 10% of total overnight stays in 2015 to 22% in 2021.
Its last quarter saw a 5% improvement in revenue year over year. This increase is mainly due to a strong performance in North America.
In addition, the improvement in seasonal rentals will also benefit Airbnb’s margins. As vaccine distribution expands around the world, people will feel more comfortable traveling further from home. 2021 is the starting point for the pandemic recovery process. The hospitality industry is expected to rebound in the second half of this year and throughout 2022.
Long-term growth is on the horizon
Over the past year, there have been some major paradigm shifts in the work and travel industries that could benefit Airbnb. Several companies around the world have infrastructures allowing their employees to work remotely. People can travel more and work efficiently from anywhere without being physically present.
In light of these changes, Airbnb introduced over 100 new upgrades to its platform in May. The new features provide more flexibility in its search options, allowing customers to search for a week’s vacation or a weekend. These options tend to be more lucrative for Airbnb. They also create a better customer experience and streamline the platform to reduce inefficiencies.
Additionally, Airbnb expands to nature, outdoor activities, culture, food and drink with a new segment called ‘experiences’. This new offering could be a major source of growth.
Overall, management estimates that the company’s total addressable market could be worth $ 3.4 trillion.
ABNB stock has strong upside potential
ABNB stock has been relatively small since going public (for obvious reasons). However, as we move closer to a post-pandemic reality, ABNB action could be one of the best Covid-19 recovery games.
Airbnb is exploring lucrative growth opportunities and investing in its platform to stay on top of new market trends. With the hospitality industry expected to rebound in the second half of the year, shares of ABNB are expected to take off significantly around the same time.
As of the publication date, Muslim Farooque does not have (directly or indirectly) any position on any of the titles mentioned in this article. The opinions expressed in this article are those of the author, subject to the InvestorPlace.com publishing guidelines.
Muslim Farooque is a passionate investor and an optimist at heart. A long-time player and passionate about technology, he has a particular affinity for the analysis of technology stocks. Muslim holds a Bachelor of Science in Applied Accounting from Oxford Brookes University.
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