Airbnb Pullback Presents Attractive Entry Point for Investors

Introduction

Bernstein, a leading investment firm, suggests that the recent pullback in Airbnb’s stock price creates an attractive opportunity for investors who are looking to buy into a high-quality growth company. Analyst Richard Clarke believes that the bearish concerns have been discredited and sees significant potential upside for the stock in the coming months.

Current Stock Performance

Despite posting in-line second-quarter results and raising guidance for average daily rate and margin, Airbnb’s stock has declined by 13% since the beginning of the month. However, the stock has still rallied by approximately 55% for the year.

Long-Term Outlook

Clarke remains optimistic about Airbnb’s long-term prospects, citing the company’s deep moat, optionality, and strong core growth in both top and bottom-line metrics. He believes that while Airbnb may appear expensive in the near term, when considering the potential revenue increase from additional opportunities, the stock actually looks increasingly cheap.

Comparison with Competitor

Clarke compares Airbnb’s valuation to that of Booking Holdings (BKNG), stating that while quality companies tend to be expensive, Airbnb looks cheaper than BKNG based on 2025 estimates. He predicts that Airbnb’s free cash flow yield will align with Booking Holdings by 2024 and surpass it by 2025.

Overall, Clarke sees the recent pullback in Airbnb’s stock price as a compelling entry point for investors, with potential upside of over 30%. He anticipates an acceleration of growth in the second half of the year as peers begin to slow down, and expects key catalysts from ancillary revenue announcements in 2024.

Contributor: AsumeTech’s