Airbnb stock price prediction: Travel rebound heralds growth

After a disastrous 2020 for the California-based disruptor, third-quarter results impress

Contents

When the economic fallout of Covid-19 battered the hospitality industry in 2020, Airbnb – the gold standard of California-based disruptive platforms – was faced with its most pressing crisis since its inception in 2007. Following travel bans and lockdown measures savaging even domestic earnings potential, it reported fourth-quarter revenues for 2020 were down 22% year on year with a loss of $3.9bn.

Despite this announcement in February, the company’s delayed initial public offering (IPO) had delivered a resounding success two months earlier in December 2020. Airbnb’s shares were priced to open at $68 and subsequently rocketed 112% within a day of trading. The resulting market cap of $86.5bn exceeded analysts’ Airbnb stock predictions at the time.

How has the Airbnb stock price fared since then? Let’s take a dive into the key figures of Airbnb’s first-ever third-quarter earnings report as a publicly-listed company.

Q3 2021 rebound

Airbnb’s 2021 third-quarter report outlines a highly successful rebound since its 2020 write off. Revenues of $2.2bn (£1.6bn, €1.9bn) were the highest ever, marking a 67% increase year on year. Big numbers should hardly be a surprise when compared with the lockdown season, but 2019 third-quarter comparisons are also favourable at 36%.

Net income increased by a whopping 280% at $834m or 213% compared with Q3 2019, while the cumulative guest arrivals hit the one billion milestone, driven by relaxed travel restrictions and high vaccination rates.

User bookings of $11.9bn were clocked on the site in the quarter, a 40% improvement compared with the third quarter of 2020.

Following the Q3 report, the Nasdaq listing on 5 November opened at $186.15.

Best quarter yet, says CEO

Summarising the key developments over the third quarter, Brian Chesky, co-founder and CEO, said: “The travel rebound that began earlier this year accelerated in the third quarter. Q3 was Airbnb’s best quarter yet… Our results show that the growing strength of the travel rebound is here despite the continued pandemic. 

“We saw continued strength in North America and EMEA and an acceleration in Latin America despite a sequential increase of cancellations.”

Stock price history

The Airbnb stock price closed at $144.71 on 10 December 2020 (the first day of trading after the IPO) and showed little movement in the following six months, closing at $146.12 on 10 June. As travel restrictions continued to lift, so too did the share price, closing at $178.45 on 4 November.

Earnings per share (EPS) estimates outlined in CNN’s Airbnb share price forecast ranged from $0.48 to $1 giving a $0.72 median, an immense underestimation of 68.8% given the company’s reported earnings giving an EPS of $1.22. 

Albeit not as dramatically, but reported sales of $2.2bn also beat the consensus estimate of $2.1bn.

Future predictions

As of Monday 8 November, the 12-month Airbnb share price forecast from CNN outlined a high of $250 and a low of $140 for a $197.50 median. Among 36 polled investment analysts, 17 recommend a buy strategy while 14 recommend hold. Only three analysts suggest selling Airbnb stock.

Over at TipRanks, 30 polled Wall Street analysts estimated an average Airbnb stock forecast of $196.79 – with 17 analysts recommending to buy, 12 to hold and one to sell.

Remember, analysts often get their predictions wrong, so you should make your own decision about whether you think the price will rise or fall.

In terms of predicted platform engagement, Dave Stephenson, CFO, says: “We’re seeing continued growing strength in the business as borders are starting to open up, people are more vaccinated and are more willing to travel… we’re going to see gross booking value increasing between Q3 and Q4,” though specific figures have not been supplied.

What is the competition?

Airbnb fights for competition on two fronts. On one side, as a disruptor platform it competes directly with traditional hotel chains, such as Marriott, Hilton and Choice Hotels, while online travel giants, including Booking.com and Expedia, jostle for consumer interest in the digital sphere.

Airbnb’s current market capitalisation on Tuesday 9 November of $125.9bn eclipses all of the above, more than doubling Marriott’s $54.8bn and dwarfing Expedia’s $28.4bn. 

The Airbnb stock price prediction from TipRanks of a 6.13% upside over 12 months outplays Marriott’s 5.13% downside, though analysts predict a 19.45% upside in Expedia’s share price.

Booking.com’s $108.49bn market capitalisation places its value nearest to Airbnb’s. Twelve-month stock price estimates of 3.05% are also positive, though investors maintain a majority hold sentiment.

All in all, the Airbnb stock forecast outplays its traditional hotel chain competitors, while digital competitors represent a viable investment alternative.

It is important to remember, however, that you should conduct thorough independent research before investing any of your capital. Price predictions are always subject to volatility.

Sector challenges

Airbnb and similar platforms in the lodging sector must be able to adapt to the dramatic shift in how people work and live in a post Covid-19 world, specifically in regards to flexible working conditions.

On the one hand, flexible working means fewer professionals are feeling the need for expensive business trips and associated lodging requirements when a Zoom conference will suffice. On the other hand, workplace flexibility is blurring the lines between travelling and living and as such, long-term stays remained the fastest-growing category for Airbnb, up 14% from 2019.

In response to accelerated flexibility requirements, Airbnb introduced the aptly-titled I’m Flexible tool to capitalise on the trend.

There has been a noticeable decline in cross-border bookings compared to urban, currently at 33% against a historical 50% average. Whether this figure can rebound is at the mercy of international border policy and loosening travel restrictions.

The Asia Pacific regions’s recovery has not been as positive as other international markets. Stricter rental regulation across the region has the potential to harm recovery in that region, though Stephenson is fairly optimistic that short-term rental regulation changes “won’t have a major negative drag on our business over time”.

Summary

The recently disclosed third-quarter results have outmanoeuvered the consensus Airbnb stock price prediction. The determining factors included a better-than-expected rebound in urban and cross-border travel, despite the former still lagging.

The company also showed adaptability to current challenges by introducing new search tools including I’m Flexible, designed to capitalise on longer-term lodging trends.

Analysts’ consensus generally favours a buy strategy, particularly in comparison to its traditional hotel chain competitors, though other digital platforms including Booking.com may represent a viable alternative.

Please conduct your own thorough research before committing to an investment in any equities. Your decision to trade depends on your attitude to risk, your expertise in this market, the spread of your investment portfolio and how comfortable you feel about losing money.

FAQs

Over at CNN, 17 recommend a buy strategy while 14 recommend to hold. Only three analysts suggest selling Airbnb stock. As always, your capital is at risk whenever investing in equities. 

The 12-month Airbnb share price forecast at CNN outlines a high of $250 and a low of $140 for a $197.50 median against a $186.15 opening price on 5 November. This represents median increase of $4.35. Remember, earnings and stock prices can go down as well as up, so never invest more than you can afford to lose.

The 2025 rate forecast at LeoProphet places the Airbnb stock price prediction for December 2025 at median of $251.31. Price predictions are highly speculative and should not be the basis of substantial equity investment.

According to CNN, 17 recommend a buy strategy while 14 recommend to hold. Only three analysts suggest selling Airbnb stock. As always, your capital is at risk whenever investing in equities. Investment analysts are not always right. Please conduct thorough research before investing your money.

Airbnb, Inc.
Daily change
155.36
Low: 151.79
High: 158.04

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