Airbnb stock has 'a lot of recovery built in' as pandemic eases, Bank of America says

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Airbnb stock has 'a lot of recovery built in' as pandemic eases, Bank of America says
Airbnb CEO Brian Chesky.REUTERS/Mike Segar
  • Airbnb's fourth-quarter revenue of $859 million surpassed Wall Street's target of $739.7 million.
  • Airbnb shares looked poised to climb to $210, says Bank of America.
  • "Travel is coming back," says Airbnb, but there's still "limited visibility" for how trends will play out in 2021.

Airbnb shares could bulk up by another 15% as quarterly results from the vacation-rentals company indicate it is "well positioned for recovery" from the COVID-19 pandemic, according to Bank of America.

The company late Thursday released its first quarterly report since its shares made their trading debut in December. Airbnb's fourth-quarter results presented an "impressive start as [a] public company in [a] pandemic," analyst Justin Post said in a note Friday.

"Still a lot of recovery built into the stock," he wrote, noting that the bank's price objective on Airbnb is $210. The neutral rating was reiterated. The shares closed Thursday's session at $182.06.

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Airbnb's revenue came in at $859 million, surpassing expectations of $739.7 million even though the result marked a 22% decline from $1.11 billion a year earlier.

Business was hurt last year as COVID-19 forced the cancellation of travel plans by leisure and business customers for Airbnb and the travel industry as a whole. But coronavirus vaccinations introduced late in 2020 have helped brighten prospects for the sector.

"Travel is coming back and we are laser-focused on preparing for the travel rebound," Brian Chesky, Airbnb's chief executive and co-founder, said in its report.

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Airbnb stock picked up 11% to $202 during Friday's session then pared the advance to 4.4%. Shares so far this year have risen about 28%.

The company's gross booking value was $5.9 billion, a drop of 31% from the year earlier but that was less than the Street's projection of a 40% drop, said BofA.

"A financial highlight in the quarter was EBITDA near breakeven," at $20 million, "and we are more confident on Airbnb achieving profitability in 2021," wrote Post.

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Bank of America, among other actions, raised its 2022 revenue projection to $6.35 billion from $6.11 billion previously and its first-quarter bookings growth view to 17% compared with its previous forecast of a 17% decline.

"However, with stock valued at 19x our upwardly revised 2022 revenues, and lock up dates still ahead, we maintain our Neutral rating," said BofA. Lock up refers to the period when major shareholders are restricted from selling their stock after a company has gone public.

While Airbnb said it's optimistic about the upcoming travel rebound, it did refrain from issuing an outlook for the rest of 2021.

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"[We] continue to have limited visibility for growth trends in 2021 given the difficulty in determining the pace of vaccine roll-outs and the related impact on willingness to travel," the company said.

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