The strong fourth quarter results were welcomed by investors and analysts, with 2022 shaping up to be another good year for the company, barring a damaging new variant of the coronavirus.
But something bigger may be happening that puts the home rental giant well positioned to lead the way post-pandemic and long-term.
Airbnb (ticker: ABNB) says a monumental shift is underway in the way people travel, thanks to the now common practice of working from home.
“Nearly two years into the pandemic, it is now clear that we are undergoing the greatest change in travel since the advent of commercial flight,” the company said in a statement. letter to shareholders.
Airbnb said remote work has “detached” many people from the need to be in the office. “As a result, people are spreading to thousands of towns and cities, staying for weeks, months, even entire seasons at a time,” he added.
While it remains to be seen whether this will be a secular trend or not, the data backs it up, at least for now.
Long-term stays of 28 nights or more are Airbnb’s fastest growing category, accounting for 22% of gross nights booked in the fourth quarter. Average trip length has increased by 15% over the past two years, and stays of seven nights or more now account for nearly half of all gross nights booked.
In the context of the travel industry’s recovery from the Covid-19 pandemic, Airbnb is in a different league.
Hilton Worldwide Holdings
(MAR) reported strong fourth-quarter earnings, closing in on a recovery to pre-pandemic levels. Hilton’s revenue per available room, for example, was down 13.5% from 2019 levels, while Marriott’s was 19% lower.
By comparison, Airbnb’s revenue and gross booking value exceeded pre-pandemic levels in the fourth quarter and for the year as a whole, while travel to cities nearly reached 2019 levels. It seems that 2022 could be even better – at the end of January, Airbnb had more than 25% of nights more for the summer than the same time in 2019. The stock soared more than 3% in early trading Wednesday.
We are a long way from the tough days of early 2020, when the Covid-19 outbreak nearly halved the company’s revenue. private evaluation to $18 billion as bookings and revenue fell. It seemed to have derailed its IPO plans, but Airbnb ended up making its commercial debut in December 2020. The company’s market value now stands at nearly $115 billion.
However, the stock’s journey has been far from smooth, as the emergence and disappearance of new variants has brought many ups and downs, in line with the wider travel industry.
Despite the company’s optimism, it’s worth noting that Airbnb said “multi-quarter forecasting remains difficult given the continued uncertainties related to Covid.”
That aside, the company’s earnings and outlook certainly impressed Wall Street.
“While we still anticipate volatility in the travel recovery, we continue to view ABNB as a must-have stock for the recovery given its strong positioning, promising long-term opportunities and profitability improvements,” said Shyam Patil, analyst at Susquehanna.
Susquehanna has a positive rating on the stock with a price target of $235, implying a 30.5% upside from Tuesday’s closing price.
Another trend has emerged in the wake of Airbnb’s earnings: target price increases on Wall Street.
analysts maintained a neutral rating on the stock but raised its price target to $205 from $190. Booked nights in the first quarter were well above expectations, they said. “Beyond 1Q22, we expect normalized travel trends to urban and international markets to be favorable for ABNB as the platform’s supply base is well matched to demand,” said the Mizuho analysts, led by James Lee.
Baird analysts raised their price target to $210, maintaining an Outperform rating, while Needham raised their target from $210 to $220, also with a Buy rating.
Analysts now have an average price target of $204.36 on the stock, implying a 13% upside from Tuesday’s closing price of $180.07.
However, only 40% of analysts have a buy rating on the stock, the lowest percentage since March 2021.
analysts raised their price target to $210 from $195, but kept the rating neutral, offering a potential explanation for Wall Street’s reticence in the stock.
“We believe Airbnb is well positioned to benefit from underlying secular trends in travel, even with a potential near-term shift from vacation rentals to hotels with further reopening,” they said. “However, we believe the risks and rewards are balanced, as ABNB shares trade at a significant premium to peer online travel agencies and other category-leading companies,” they added.
Write to Callum Keown at [email protected]