Analysts revamp Airbnb stock price targets after earnings

Published 4:34 pm Wednesday, February 14, 2024

By Dan Weil

: Airbnb co-founder and CEO Brian Chesky. The company leads the short-term home rental industry.

Airbnb (ABNB) has carved out a dominant position in the short-term home rental space since its founding in 2007.

Its online platform has more than 5 million hosts and has accommodated 1.5 billion guests over the years, according to the company.

That scale will propel Airbnb going forward, many analysts say. “We think that Airbnb’s global online-travel-agency position will strengthen over the next decade, driven by the leading alternative accommodation network,” wrote Morningstar analyst Dan Wasiolek.

“We think this network advantage will be supported by generative artificial intelligence investment and expansion into the experiences vertical over the next several years.”

Experiences are activities Airbnb guests can pursue that are led by hosts.

Airbnb co-founder and CEO Brian Chesky. The company leads the short-term home rental industry.

Eugene Gologursky/Getty Images

Airbnb’s rising revenue

Airbnb released its fourth-quarter earnings report Tuesday. It posted revenue of $2.22 billion, up 17% from a year earlier and ahead of analysts’ forecast of $2.17 billion.

The company registered a net loss of $349 million, or 55 cents a share, reversing a profit of $319 million, or 48 cents per share, a year ago.

But the loss included a $1 billion charge for tax withholding expenses and lodging tax reserves. Leaving out that and other adjustments, Airbnb showed a profit of $489 million, or 76 cents a share. That easily topped analysts’ estimate of 62 cents.

And Airbnb’s future looks bright. “There are some massive opportunities in front of us,” company CEO Brian Chesky said in the earnings conference call.

Airbnb predicted revenue of $2.03 billion to $2.07 billion in the first quarter, or a rise of 12% to 14% from a year earlier. That would beat analysts’ projection of $2.02 billion.

“Guest demand remains strong — especially among first-time bookers,… and growth is accelerating in under-penetrated markets,” Airbnb said in the earnings report.

To be sure, not everything in the earnings report was puppy dogs and ice cream.

Airbnb expects the growth of nights booked to “moderate” in the current quarter from the fourth quarter of 2023.

Investors weren’t so happy with the earnings news, pushing the stock down 2% Wednesday to $148. The stock has climbed 9% year to date and 27% over the past year.

Analysts React to Airbnb Earnings

Analysts offered mixed reactions to the news. Most of them raised their stock price target, but some of their targets remain below the stock’s current level.

More Wall Street Analysts:

JPMorgan Chase boosted its target to $140 from $118, leaving its rating at neutral. It views the earnings report as “high-quality,” beating expectations in many areas, according to The Fly.

However, the bank’s analysts thought investors would focus on the guidance for decelerating growth in room-night bookings. And it looks like they may be right.

Morgan Stanley increased its price target to $120 from $105. It offered a similar analysis to JPMorgan’s, citing strong fourth-quarter numbers but expressing concern about the room-night bookings forecast.

Airbnb’s prediction of 9% room-night growth represents a drop from the company’s prior forecast of 10.5%, the bank explained.

Meanwhile, Morningstar’s Wasiolek plans to increase his $132 fair-value estimate by a low single-digit percentage. He assigns Airbnb a narrow moat, meaning he sees it with competitive advantages lasting at least 10 years.

Wasiolek views the possible deceleration of room-booking growth “as expected and a natural evolution back to normalized levels after a strong recovery in 2020-23.”