US: Wall Street analysts are offering their opinions on Airbnb, almost a month after the company’s high profile IPO.
Canaccord Genuity was among the most bullish of the analysts, giving Airbnb a buy rating and a price target of $175. “We expect Airbnb’s scale and platform advantages to cement an early lead in supply liquidity and demand, enabling it to further distance itself from potential competitors. The stock is up 116 per cent from its IPO price, and the premium valuation may limit near-term upside. However, we see a long runway for growth and significant opportunity to create more leverage in the model over time,” Canaccord Genuity said.
“Like most of the travel industry Airbnb faced an immediate spike in cancellations and a freeze on new bookings at the onset of the pandemic, but unlike many of its competitors the company saw a sharp recovery of demand beginning in May. Domestic travel held up particularly well, with consumers increasingly looking to rent whole homes in destinations within driving distance, helping to offset weakness in international travel. With vaccine distribution in progress, we are increasingly confident that Airbnb’s 2H21 results should approach pre-COVID levels, with many years of robust revenue growth ahead, and we see upside potential from take rate expansion along with significant operating leverage inherent in the company’s asset-light model,” it added.
Goldman Sachs has given the stock a neutral rating, with a price target of $146.80. It said: “Airbnb allows a property owner in one city to generate revenue to secure housing in another city. To the extent that a more mobile workforce will be a major feature of post-pandemic society, Airbnb will be a critical part of the ecosystem that enables it. We see this, and the platform optionality it creates, along with opportunities in travel and experiences, as one of the most significant early-stage growth propositions in the Internet sector. With management having significantly reduced costs in the early days of the pandemic, aligning the cost structure around the core alternative accommodations business, the economics of the model at scale are among the most favorable that we see in the online travel space,” Goldman said.
Credit Suisse has also given a neutral rating, with a price target of $156. “Over the past decade, alternative accommodations as a share of total lodging have increased from ~6% to ~11% dollar share,” it said. “This represents in our view an ongoing shift in consumer preference away from traditional to alternative lodging. We expect this substitution effect to accelerate further due to pandemic-driven changes in behaviour, with incremental consumers likely trying the category for the first time and choosing to stick after a positive experience. Currently, Airbnb charges the guest 12 per cent and individual hosts three per cent versus traditional operators levying the entirety of the fees on the property owner. We therefore see ample opportunity for the company to increase monetisation in the long term from: 1) payment processing fees – Airbnb as the merchant of record in the transaction bears the payment processing charges, which it can pass on to the hosts, and 2) sponsored listings – optionality to launch an advertising tool for hosts, similar to Amazon, eBay, and other marketplaces.”
Oppenheimer offered a perform rating on valuation. “We believe ABNB is the best positioned travel company into the post-Covid recovery based on its strong global brand,” said Oppenheimer’s Jed Kelly in a note to investors. “Additionally, we see ‘work from anywhere’ trends enduring and providing strong tailwinds for ABNB to penetrate its massive TAM [total addressable market].”
Click here to see a recording of the Urban Living webinar discussing Airbnb’s IPO.