The Airbnb logo is displayed on the Nasdaq digital billboard in Times Square in New York on December 10, 2020.
I have Betancur | AFP | Getty Images
Wall Street analysts see strong growth ahead of Airbnb’s business, but don’t see much room for stocks to work after it has more than doubled from its debut last month.
More than 20 analysts began coverage of the home-sharing site to begin the year, according to FactSet and reports sent to CNBC. Two-thirds suggest holding the shares and five of the 18 analysts who have price targets expect the shares to go down.
Last month, Airbnb sold shares at $ 68 on its IPO, before seeing shares rise 113% on its first trading day on Dec. 10, to close at $ 144.71. Pop valued the company at $ 86.5 billion and more than $ 100 billion based on a fully diluted stock count. Shares have been nearly flat in the three weeks since their IPO, before falling 5.2% on Monday to $ 139.15.
Morgan Stanley analysts began coverage with the equivalent of a retention rating and a target price of $ 140, although the firm considers Airbnb to be a leader in the hosting market. Morgan Stanley said that at about 16 times the estimated revenue for 2022, investors can expect a “better entry point.”
“While we are optimistic about Airbnb’s industry and business model, we see that the current valuation is fair,” the analysts wrote.
Similarly, Wedbush began coverage with a retention recommendation and a $ 151 price target, and defined the company as a “dominant player in an attractive segment.” To justify anything higher, Airbnb would have to move to adjacent markets or wait until “considerable growth is able to catch up with the premium valuation that was obtained from day one,” they wrote. Wedbush analysts.
The most bearish reports were from Deutsche Bank and Stifel, which set $ 130 targets in Airbnb shares. Stifel said his price estimate was based on an analysis of discounted cash flows that represented the cost of capital and the growth rate.
Among the seven buy ratings that will begin the year, the highest price target was from Needham, which expects stocks to reach $ 200 in the next 12 months. Needham analysts predict that the alternative housing market could expand five to ten times from where it currently stands.
Airbnb will also benefit from “accumulated travel demand” in 2021 after the coronavirus pandemic forced many consumers to cancel their plans last year, the firm said, adding that the business model of the company is particularly attractive because it does not depend on Google for traffic. Airbnb stated in its brochure that 91% of its guests during the first three quarters of 2020 came to the site directly or through unpaid channels.
Needham says its pricing target is based on a 22-fold multiple of revenue by 2022.
“In our view, ‘the major upward drivers would accelerate stock gains in the U.S. and Covid would decline earlier than expected on the 21st,” they wrote. incremental headwind growth and / or traffic stagnation that would cause the company to invest more aggressively in customer acquisition, presumably through Google. “
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