Airbnb receives bearish analyst calls after its stock more than doubled on its IPO

The Airbnb logo will appear on the Nasdaq digital billboard in Times Square in New York on December 10, 2020.

Kena Betancur | AFP | Getty Images

Wall Street analysts see a lot of growth for the Airbnb business, but they don’t see much headroom for the stock after more than doubling on its debut last month.

According to FactSet and reports to CNBC, more than 20 analysts have started coverage of the home-sharing website to kick off the year. Two-thirds suggest holding the stock, and five of the 18 analysts with price targets expect the stock to decline.

Airbnb sold shares at $ 68 when it went public last month before closing 113% to $ 144.71 on its first day of trading on December 10th. The Pop valued the company at $ 86.5 billion and over $ 100 billion based on a fully diluted stock count. The stock was pretty much flat in the three weeks since going public before falling 5.2% to $ 139.15 on Monday.

Morgan Stanley analysts launched coverage with a hold rating and a price target of $ 140, despite the firm seeing Airbnb as a leader in the accommodation market. Morgan Stanley said investors can wait for a “better entry point” with around 16 times estimated sales in 2022.

“While we are optimistic about Airbnb’s industry and business model, we see the current rating as fair,” the analysts write.

Similarly, Wedbush began reporting with a hold recommendation and a price target of $ 151, which the company described as a “dominant player in an attractive segment.” To justify something higher, Airbnb would have to move into neighboring markets or wait until “the sizeable growth can catch up with the stock’s premium valuation from day one,” wrote Wedbush analysts.

The most bearish of reports came from Deutsche Bank and Stifel, both of which set $ 130 targets for Airbnb stock. According to Stifel, the price estimate is based on a discounted cash flow analysis that takes into account the cost of capital and the growth rate.

Of the seven buy ratings at the start of the year, the highest price target came from Needham, which expects the stock to hit $ 200 over the next 12 months. Needham analysts predict that the alternative accommodation market could grow five to ten times its current level.

Airbnb is also likely to benefit from the “pent-up travel request” in 2021 after the coronavirus pandemic forced so many consumers to cancel their plans last year. 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 either directly or through unpaid channels in the first three quarters of 2020.

According to Needham, the price target is based on a multiple of 22 times sales in 2022.

“In our view, major upside drivers would accelerate the acceleration in US equity earnings and Covid wane earlier than expected in 21st,” they wrote. “Our main problems are that Covid is turning into multi-year headwinds and / or stagnant traffic growth that would cause the company to invest more aggressively in customer acquisition, presumably through Google.”

CLOCK: Online travel inventory recovery is non-linear

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