Will Airbnb Stock Have an Advantage in the Post-Covid Travel Boom?

Airbnb (NASDAQ:ABNB) stock has largely held up this year, despite the broader sell-off in tech stocks, down about 1% year-to-date 2022, versus the Nasdaq-100, which remains down. down about 16% over the same period. In fact, the stock was actually up more than 10% year-to-date since last week, before concerns over the Russian-Ukrainian conflict rattled markets. While investors have generally sold pandemic-favorite tech names and high-growth stocks, Airbnb is benefiting as the travel and leisure industry sees considerable pent-up demand after nearly two years of Covid-19 restrictions. For example, in the fourth quarter of 2021, the company saw revenue grow 78% year-over-year to $1.5 billion, with Adjusted EBITDA margins at a low relatively healthy 22%. So will Airbnb continue to maintain its edge as the travel industry experiences a post-Covid boom?

Airbnb seems to have a lot going for it. The company has planned longer stays during the pandemic and this trend may continue, to some extent, as hybrid working is likely to stick around. For example, the company says the average length of trips over the past two years has increased by around 15%, with stays longer than seven days accounting for more than half of all gross nights booked. Additionally, travel to cities and urban areas, where Airbnb has traditionally been very strong, rebounded to 2019 levels during Airbnb’s fourth quarter, and this could also prove to be a tailwind for the company until further notice. ‘ in 2022. Separately, Covid-19 has proven to be somewhat unpredictable and there is always the possibility of new virus variants and outbreaks of infections. Airbnb’s business could be more resilient to another wave of Covid, given that its inventory is more suited to social distancing, with fewer common spaces compared to hotels and resorts.

Additionally, Airbnb’s asset-light, high operating leverage business model should allow it to be very profitable over the long term as revenues continue to grow. The company is expected to post its first full-year profit in 2022, which could also prove a catalyst for the stock in a market where investors are increasingly prioritizing earnings and cash flow. We value Airbnb shares at around $190 per share, or around 15 times projected 2022 revenue. Our price estimate is around 15% above the current market price. See our interactive analysis on Airbnb valuation: expensive or cheap? for more details. View our dashboard at Airbnb revenue for an overview of Airbnb’s business model and likely revenue path.

Looking for other stocks that could benefit from the extension of the hybrid work trend? Discover our theme Work from home stocks

Here you’ll find our previous coverage of Airbnb Stock, where you can follow our view over time.

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Return February 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
ABNB Back 7% -1% 13%
S&P 500 return -5% -ten% 92%
Performance of the Trefis MS portfolio -3% -12% 246%

[1] Cumulative monthly and cumulative annual as of 02/23/2022
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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