The Airbnb logo is displayed on the Nasdaq digital billboard in Times Square in New York on December 10, 2020.
Kena Betancur | AFP | Getty Images
Wall Street analysts see a lot of growth ahead for Airbnb’s businesses, but they don’t see much room for the stock to run after it more than doubled in its debut last month.
More than 20 analysts started covering the home sharing website earlier this year, according to FactSet and reports sent to CNBC. Two-thirds suggest holding the stock, and five of the 18 analysts who have target prices expect the stock to fall.
Airbnb sold shares for $ 68 on its IPO last month, before seeing shares rise 113% on its first trading day on December 10, closing at $ 144.71. Pop valued the company at $ 86.5 billion and more than $ 100 billion based on a fully diluted share count. The stock has been virtually stable in the three weeks since its IPO, before dropping 5.2% on Monday to $ 139.15.
Morgan Stanley analysts began coverage with the equivalent of a wait rating and a $ 140 price target, although the company saw Airbnb as a leader in the accommodation market. Morgan Stanley said that about 16 times the estimated revenue for 2022, investors can expect a “better entry point”.
“While we are optimistic about the Airbnb industry and business model, we see the current assessment as fair,” wrote the analysts.
Likewise, Wedbush began coverage with a wait recommendation and a target price of $ 151, calling the company a “dominant player in an attractive segment”. To justify anything higher, Airbnb would need to enter adjacent markets or wait until “considerable growth is able to keep up with the premium appreciation provided for shares from day one,” wrote Wedbush analysts.
The most pessimistic reports were from Deutsche Bank and Stifel, who put $ 130 targets on Airbnb shares. Stifel said his price estimate was based on a discounted cash flow analysis that accounted for the cost of capital and the rate of growth.
Among the seven buy ratings at the beginning of the year, the highest price target came from Needham, who expects the shares to reach $ 200 in the next 12 months. Needham analysts predict that the alternative accommodation market could expand five or ten times from what it is today.
Airbnb is also expected to benefit from “pent-up travel demand” in 2021, after the coronavirus pandemic forced so many consumers to cancel their plans last year, the company said, adding that the company’s business model is particularly attractive because it does not depend on Google for traffic. Airbnb said in its prospectus that 91% of its guests in the first three quarters of 2020 came to the site directly or through unpaid channels.
Needham says his target price is based on a multiple of 22 times revenue in 2022.
“The main growth drivers would be the acceleration of US shareholder gains and the reduction of Covid earlier than expected in 21, in our opinion,” they wrote. “Our main concerns are Covid becoming a multi-year incremental obstacle and / or stagnant traffic growth that would make the company invest more aggressively in acquiring customers, presumably through Google.”
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