The Airbnb logo is displayed on the Nasdaq digital panel in New York’s Times Square on December 10, 2020.
Got Betancur | AFP | Getty Images
Wall Street analysts see a big boost for the Airbnb business, but they don’t see much room for stocks to double after doubling in early last month.
More than 20 analysts have begun covering the housing-sharing site to start the year, according to FactSet and reports sent to CNBC. Two-thirds suggest holding the shares, and five of the 18 price-targeting analysts expect the shares to decline.
Airbnb sold shares at $ 68 in the IPO last month, before seeing the stock rise 113% on the first trading day of December 10, to close at $ 144.71. Pop valued the company at $ 86.5 billion and over $ 100 billion based on a diluted total number of shares. The stock was roughly flat in the three weeks since the offering, before falling 5.2% Monday to $ 139.15.
Morgan Stanley analysts have initiated coverage with the equivalent of a holding rating and a target price of $ 140, even though the company considers Airbnb to be 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 Airbnb’s industry and business model, we see the current assessment as correct,” the analysts wrote.
Similarly, Wedbush began coverage with a waiting recommendation and a $ 151 price target, calling the company a “dominant player in an attractive segment.” To justify something bigger, Airbnb should move to adjacent markets or wait until “considerable growth is able to catch up with the valuation of first-day stock premiums,” Wedbush analysts wrote.
The lowest reports were from Deutsche Bank and Stifel, which placed both $ 130 targets on Airbnb shares. Stifel stated that the price estimate was based on an analysis of discounted cash flow, which represented the cost of capital and the growth rate.
Among the seven buy ratings starting this year, the highest target price came from Needham, which expects the shares to reach $ 200 in the next 12 months. Analysts in Needham predict that the alternative accommodation market could expand five or 10 times where it is today.
Airbnb will also benefit from “withheld 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 rely 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 either directly or through unpaid channels.
Needham says its price target is based on a 22-fold multiple income in 2022.
“In our view, the major key factors would accelerate US earnings and Covid would decline earlier than expected in ’21,” they wrote. “Our main downside concerns are Covid, leading to a steady increase over several years and / or a stagnant increase in traffic, which would cause the company to invest more aggressively in customer acquisition, probably through Google.”
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