Is it too late to purchase Airbnb inventory?

Airbnb (NASDAQ: ABNB) launched its first-quarter earnings report on Could 3. Income for the short-term rental platform rose 70% year-over-year to $1.51 billion, beating analyst estimates of $60 million.

Its internet loss fell from $1.17 billion to only $19 million, or $0.03 per share, nicely above analysts’ expectations of $0.27. Its adjusted earnings earlier than curiosity, tax, depreciation and amortization (EBITDA) of $229 million improved from a lack of $59 million a 12 months earlier, and in addition marked the primary time its adjusted EBITDA from first quarter turned constructive.

These numbers are spectacular, however buyers may surprise if it is too late to purchase Airbnb at these ranges. The inventory continues to be buying and selling at 13 occasions this 12 months’s gross sales and stays round 130% above its preliminary public providing (IPO) worth. This worth has remained kind of secure over the previous three months, whilst rising rates of interest and different macroeconomic headwinds have ravaged higher-growth tech shares. Let’s dig deeper into Airbnb’s enterprise to see if it is nonetheless a worthwhile funding.

Picture supply: Airbnb.

How briskly is Airbnb rising?

Airbnb’s income fell 30% to $3.4 billion in 2020 as world journey got here to a halt through the pandemic. However in 2021, its income jumped 77% to $6 billion as these headwinds light. This post-lockdown restoration follows its year-over-year progress in booked room nights and experiences, gross reserving quantity (GBV), and whole income over the previous 12 months:

Metric

% progress (12 months on 12 months)
Q1 2021 Q2 2021 Q3 2021 This autumn 2021 Q1 2022

Nights and experiences

13%

197%

29%

59%

59%

GBV

52%

320%

48%

91%

67%

Complete income

5%

299%

67%

78%

70%

Information supply: Airbnb. YOY = 12 months after 12 months.

Airbnb’s post-lockdown restoration has made it a extra enticing funding than different pandemic-era progress gamers like e-commerce, distant working and meals supply companies, which at the moment are dealing with… tough year-to-year comparisons.

Airbnb’s enterprise mannequin can be nicely protected in opposition to inflation. Price range-conscious vacationers will probably stick with its short-term leases as a substitute of costlier resorts, whereas hosts will routinely hire out their properties to generate extra passive revenue. Opposite to UberTechnologies and Lyft, Airbnb isn’t uncovered to rising gas and labor prices. All of those property protected him from being offered off within the tech sector.

Development in internet revenue stabilizes

In 2020, Airbnb posted an enormous internet lack of $4.6 billion and a adverse EBITDA of $251 million. However in 2021, the web loss narrowed to $352 million and the corporate generated constructive adjusted EBITDA of $1.6 billion. Adjusted EBITDA margins have additionally remained constructive for 5 consecutive quarters:

Metric Q1 2021 Q2 2021 Q3 2021 This autumn 2021 Q1 2022

Internet Earnings (Thousands and thousands)

($1,172)

($68)

$834

$55

($19)

Adjusted EBITDA margin

(7%)

16%

49%

22%

15%

Information supply: Airbnb.

Airbnb’s strong income progress and stabilizing margins boosted its free money movement (FCF) 146% year-over-year to a document $1.2 billion within the first quarter. Its whole money, money equivalents, marketable securities and restricted money additionally rose 41% to $9.3 billion.

Pink outlook for the remainder of the 12 months

Airbnb expects income to develop between 56% and 64% year-over-year within the second quarter. The estimate comes whilst Russia’s invasion of Ukraine continues to disrupt journey to Europe. In actual fact, the corporate identified that many customers had booked Airbnb leases in Ukraine after the battle started, although they’d no intention of going there, so as to give the hosts cash. Ukrainians.

Because of this, roughly 600,000 nights have been nonetheless booked in Ukraine through the first quarter for a complete GBV of $20 million. This was solely 0.1% of its whole GBV, but it surely exhibits how Airbnb can overcome geopolitical conflicts in much less typical methods than conventional resort chains.

On the finish of April, Airbnb had already booked 30% extra nights for the summer time season in comparison with the identical interval in 2019, and stated its progress in comparison with this pre-pandemic 12 months was “even greater as we glance additional this 12 months. He additionally claims his clients are “reserving greater than ever” and staying longer at his properties.

Because of this, analysts anticipate Airbnb’s income and adjusted EBITDA to develop 38% and 50% respectively in 2022. Additionally they anticipate Airbnb to generate internet revenue of 1.21 billion {dollars} in a full 12 months.

It isn’t too late to purchase Airbnb

Airbnb has been a dependable funding over the previous few months because it is ready to climate many macro headwinds with out dealing with important macro headwinds.

It nonetheless faces regulatory challenges and competitors from cheaper resorts and conventional on-line journey businesses, however its progress charges point out it’s weathering these challenges. Airbnb has now turn into synonymous with short-term leases, and this model recognition might be sure that it stays a lovely various to conventional resorts for a few years to come back.

Its inventory could appear a bit expensive proper now, however I feel buyers who accumulate extra inventory at this time will probably be nicely rewarded sooner or later.

Discover out why Airbnb, Inc. is likely one of the high 10 shares to purchase now

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Leo Solar has no place within the shares talked about. The Motley Idiot holds jobs and recommends Airbnb, Inc. The Motley Idiot recommends Uber Applied sciences. The Motley Idiot has a disclosure coverage.

The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.

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