The gross value of bookings on Airbnb was 52% higher than a year earlier.
Dreamstime
Airbnb shares are trading modestly higher a day after the company reported generally well-received results for the March quarter. While analysts were generally upbeat about the quarter, many Wall Street firms also reduced their targets for the share price to reflect the market’s more cautious view on high-price, high-growth tech stocks.
Airbnb’s stock price is down about 37% from its record high, and now trades slightly below the stock’s closing level of $144 on the first day of trading as a public company last December. Shares were up 3%, to $140 on Friday.
For the quarter, Airbnb (ticker: ABNB) posted revenue of $887 million, up 5% from the year-earlier quarter. Gross booking value was $10.3 billion, up 52% from a year earlier. Adjusted earnings before interest, taxes, depreciation, and amortization came in at a loss of $59 million, compared with a loss of $334 million in the year-earlier quarter.
“With the rollout of vaccines and the easing of some travel restrictions, our business significantly improved in Q1 2021 compared with the same period a year ago,” Airbnb said in a letter to shareholders. “People’s desire to travel, combined with our tightly managed expenses, drove a return to positive topline growth with materially improved adjusted Ebitda.”
At least 10 analysts cut their target prices. There are still concerns about valuation: Some analysts pointed out that Airbnb stock trades at a far higher multiple of sales than the online travel agencies. The stock sells for about 18 times the per-share sales expected for the current year, while Booking.com trades at 10 times. The figure for Expedia is about three times.
Several analysts also noted that a large tranche of the company’s stock will be unlocked from post-IPO trading restrictions on Monday, a factor that could make trading more volatile.
Wells Fargo analyst Brian Fitzgerald on Friday raised his rating on the stock to Overweight from Equal Weight, while keeping his $200 target for the stock price. That call implies a gain of about 47%. He said in a research note that the strong results show the company has momentum as the pandemic ends, and predicted that the freedom to work outside the office the crisis has brought should benefit the market for short-term rentals over the long term.
“There’s a lot to like about the Airbnb story: a very large market; leading competitive positioning in short-term rentals; a very strong management team led by a visionary founder; [and] a business model that has proven resilient through the Covid-19 pandemic,” he said.
Fitzgerald also upgraded DoorDash (DASH) shares.
Evercore ISI’s Mark Mahaney is bullish, too. He repeated an Outperform rating on the stock but cut his target for the share price to $195, from $245. Mahaney said he finds it impressive that the company was able to grow versus 2019 levels despite weakness in cities and international stays. Urban bookings were down to 40% of total nights from more than 60% pre-Covid, while domestic nights were 80% of the total, compared with a 50/50 split.
“We expect Airbnb to experience tailwinds to its business as these two segments inevitably recover,” he said.
Atlantic Equities analyst James Cordwell is more cautious, keeping his Neutral rating and $150 target on the stock. He remains concerned about the stock’s valuation and noted that the growth in gross booking value largely reflects a spike in bookings for stays of 28 days or longer. Although that underlines the company’s argument that the ability to work from anywhere may help it. vacation-related nights might have been down 30%, comparable to declines at the online travel agencies, he said.
“Airbnb remains well positioned for the travel recovery and we are raising our estimates, but a premium valuation leaves us staying on the sidelines for now,” Cordwell wrote.
Wedbush analyst James Hardiman maintained his Neutral rating on the shares, trimming his target to $150, from $175. “Investor perception of Airbnb has been one of a company that is simultaneously a big Covid beneficiary while also being significantly leveraged to the recovery,” he wrote. “This may be a difficult line to continue to straddle, particularly if we do not begin to see significant growth over 2019 in the near-term, with a rocky recovery in Europe and parts of Asia serving as the biggest impediments to this progress.”
Gordon Haskett’s Robert Mollins reiterated his Underperform rating and $119 target on Airbnb shares. Mollins said there is a lot to be optimistic about after the strong earnings announcement, but that valuation concerns and risks around the lockup expiration outweigh the growth in bookings. He suggested that investors seeking exposure to online travel businesses turn instead to Expedia (EXPE) and Booking.com (BKNG), which he said offer a more compelling balance of risks and potential rewards.
Write to Eric J. Savitz at [email protected]
