The Airbnb logo will be featured on Nasdaq’s digital billboard in New York’s Times Square on December 10, 2020.
Got Betancur | AFP | Getty Images
Wall Street analysts are seeing a lot of growth for Airbnb’s business, but they don’t see much room for the stock to run after it more than doubled on its debut last month.
According to FactSet and reports sent to CNBC, more than 20 analysts have started coverage of the homesharing site to start the year. Two-thirds propose to hold the stock, and five of the 18 analysts with price targets expect the stock to fall.
Airbnb sold shares for $ 68 during the IPO last month, before the stock rose 113% to $ 144.71 on the first day of trading on December 10. The doll valued the company at $ 86.5 billion, and more than $ 100 billion based on a fully diluted number of shares. The stock has been roughly level in the three weeks since its initial public offering, before falling 5.2% on Monday to $ 139.15.
Analysts at Morgan Stanley started with coverage with the equivalent of a hold rating and a price target of $ 140, even though the company views Airbnb as a leader in the accommodation market. Morgan Stanley said investors can wait for a “better entry point” at about 16 times the estimated 2022 earnings.
“While we are optimistic about Airbnb’s industry and business model, we consider the current valuation to be reasonable,” the analysts wrote.
Likewise, Wedbush started with a hold recommendation and a price target of $ 151, which the company called a “dominant player in an attractive segment.” To justify anything higher, Airbnb would have to move to neighboring markets or wait until “the significant growth is able to catch up with the stock’s premium value from day one,” Wedbush analysts wrote.
The most bearish reports were from Deutsche Bank and Stifel, both of which posted $ 130 targets on Airbnb’s stock. Stifel said his price estimate was based on an analysis of the present value of the cash flow that took the cost of capital and growth rate into account.
Of the seven buy ratings to start the year, the highest price target came from Needham, which expects the stock to hit $ 200 in the next 12 months. Needham analysts predict that the alternative accommodation market could grow five or ten times bigger than it is today.
Airbnb is also likely to benefit from the ‘pent-up travel demand’ in 2021 after the coronavirus pandemic last year forced so many consumers to cancel their plans, the company said, adding that the company’s business model is particularly attractive because it doesn’t rely on Google for traffic. Airbnb said in its prospectus that 91% of its guests came to the site directly or through unpaid channels in the first three quarters of 2020.
Needham says the price target is based on a multiple of 22 times sales by 2022.
“We believe the key drivers would accelerate the US stock and Covid faster than expected in ’21,” they wrote. “Our main drawback is that Covid is turning into a stepped multi-year headwind and / or stagnant traffic growth that would lead the company to invest more aggressively in customer acquisition, presumably through Google.”
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