Why is Airbnb stock falling?

Holiday sharing platform Airbnb Stock (NASDAQ
) has seen a strong sell-off in recent months, losing nearly 50% of its value since early April and hit a 52-week low of around $90 per share. Although the travel industry has seen demand increase during the summer travel season as Covid-19 cases decrease around the world, it is questionable whether this will take into account a multitude of winds macroeconomic opposites. Soaring inflation is putting pressure on household budgets, and the Federal Reserve is also raising rates at a more aggressive pace to control prices. This could push the US economy into recession in the coming quarters. Additionally, traffic to Airbnb’s website and other online booking portals apparently declined from May to June, according to analysis by BTIG. Now, we’ve yet to see the impacts of these macro factors on Airbnb’s financials, as the company actually reported strong first-quarter results in May while guiding growth of at least 52% in its revenues compared to the second quarter. However, Airbnb stock is highly sensitive to macro factors, given its reliance on discretionary spending, and also due to the fact that it is a high growth, high multiple stock.

So is Airbnb stock still a buy at current levels of around $90 per share? We think so. With the recent sale, Airbnb is currently trading at around 7x forecast revenue for 2022, well below the 20x
multiples that he traded at his peak. Even if there is a recession in the United States, the indicators do not indicate that it is very serious, given that household savings have increased considerably after the pandemic, the major banks also remaining well capitalized. Airbnb is also much better equipped to weather a recession than hotels, given its asset-light model and also the fact that its rates are generally cheaper than hotel rooms. We value Airbnb shares at around $145 per share, or about 11 times our projected 2022 revenue for the company. Our price estimate is about 60% higher than the current market price. See our interactive analysis on Airbnb Rating: expensive or cheap? for more details. View our dashboard at Airbnb revenue for an overview of Airbnb’s business model and likely revenue path.

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