Airbnb shares: What’s the outlook after robust results?

• Airbnb (Nasdaq: ABNB) share price inches down to US$154.99 per share
• Supply constraint may be a longer-term concern as demand returns, Mizuho says
• Some analysts foresee longer stays propelling bookings through 2022
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Will Airbnb enjoy further stock price gains?

Shares of short-term rental booking platform Airbnb dipped 0.7% day-on-day to finish Tuesday at US$154.99.

Year-to-date, the stock is still up 11.4%. It went public on 10 December 2020.

The US firm last week announced it would provide free temporary housing for 20,000 refugees fleeing the Taliban’s takeover of Afghanistan. The cost will be funded by Airbnb, its CEO Brian Chesky, and donations to its charity arm.

Meanwhile, its second-quarter results, released last month, beat Wall Street estimates.

As of Wednesday morning, 19 analysts recommended ‘buy’ on ABNB shares, 15 suggested ‘hold’, while two said to ‘sell’.

Their average 12-month target price was US$170.96 per share, Bloomberg data showed. That implies a potential 10.3% upside, based on Tuesday’s close.

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Airbnb quarterly results surpass expectations

The California-based home rental company reported better-than-expected metrics for Q2 2021 revenue, gross booking value (GBV), and adjusted Ebitda.

Needham analysts, reiterating ‘buy’ and upping their target to US$200, said Airbnb ‘has been telegraphing better profitability since their IPO, but the magnitude and timing of adjusted Ebitda dollars and margins gains continues to surprise to the upside’.

An increase in longer-duration stays was a key driver as Airbnb surpassed consensus bookings by more than US$2 billion in Q2 2021. Bloomberg Intelligence expects this trend to persist through next year, adding that the ‘strong results give us confidence that adjusted Ebitda can exceed US$1.5 billion in 2022’.

Mizuho’s research team noted that the company improved the distribution of supply with flexible dates and locations, and also enhanced its host on-boarding process, driving active listings up 8% quarter-on-quarter and ‘alleviating investor concerns’.

‘Due to the outperformance in room nights and ADRs (average daily rates), Ebitda was meaningfully ahead of expectations at US$217 million versus US$49 million consensus,’ Mizuho said. It kept a ‘neutral rating’ and US$165 target.

However, Airbnb has warned of slowness in bookings starting in July.

Mizuho believes the headwinds are transitory, and maintained its 2026 Ebitda estimate of US$4.4 billion.

‘The key concern for the story longer-term is supply constraint as demand comes back, and ABNB may need to diversify its inventory from professional hosts and hotels over time,’ Mizuho added.

BTIG wrote that there may be ‘under-appreciated opportunities with the nascent Experiences product and potential for sponsored listings, which together could add more than US$1.5 billion to annual revenue’.

Needham is bullish on the potential for a steeper profitability trajectory post-pandemic relative to marketplace peers, as Airbnb’s ‘experimenting’ with lower marketing spend during the pandemic showed it could acquire customers at a much lower cost than previously.