Airbnb's 135% Rally Takes IPO Crown With Room to Run
Airbnb's revenue grew to $1.53 billion in the fourth quarter, as people spread out over thousands of towns and cities with workers no longer having to be in traditional offices five days a week.
April 13, 2022 at 01:56 PM
3 minute read
With shares skyrocketing since its trading debut, Airbnb Inc.'s initial public offering was well-timed. That rally shows little sign of abating.
It has soared 140% since it went public in December 2020. The timing was auspicious: COVID-19 vaccines were just arriving, sparking a revival in travel and also demand for lodging where travelers could isolate more easily than in a hotel. Employees also embraced a work-anywhere environment, encouraging the use of temporary homes.
And investors have more reasons to stay bullish. Airbnb's stock is expected to climb by an average of 22% over the next 12 months with a majority of the 41 analysts covering the firm recommending investors hold on to their shares or buy more, according to data compiled by Bloomberg.
"It is evolving, and becoming an interesting play with respect to work-from-home and long-term rental trends," said Thomas George, a portfolio manager at Grizzle Investment Management, which owns the stock. "Those are additional levers it can unlock for growth."
Brokerages on average predict the company next month will report a 64% jump in first-quarter sales. Airbnb, which was profitable on a net-income basis the past two quarters, probably lost money again in the first three months of this year, analysts say.
Its revenue grew 78% to $1.53 billion in the fourth quarter, beating analysts' projections as people spread out over thousands of towns and cities and stayed for weeks and months with workers no longer having to be in traditional offices five days a week.
"The benefits seen over the past year or so are expected to continue, especially as traveling increases with the pandemic hopefully continuing to wane," said Scott Kessler, an analyst at Third Bridge.
Airbnb's stock performance also has given it the title of best performer of any IPO to raise $1 billion or more since its debut, according Bloomberg data. This comes at a time where weak trading in recent IPOs has weighed on the listings pipeline. At $105 billion in market value, it's now the biggest online travel company, eclipsing Booking Holdings Inc., Expedia Group Inc. and Marriott International Inc.
Some caution is warranted. Its stock rally has surpassed its peers by a mile in the travel industry since it went public, which could mean its upside is minimal. Booking has climbed 5.5%, Marriott is 29% higher and Expedia is up 44% in that time period.
And it isn't cheap. Airbnb sells for about 12 times its estimated sales. That's well above its peers with Booking sitting at 5.3, and both Expedia's and TripAdvisor's are below 3.
To be sure, shares of Airbnb more than doubled in value in its blockbuster debut and seen a more moderate growth rate since. The company has, however, fared better than other growth stocks as the market navigated through multiple tech sell-offs.
Subrat Patnaik and Ryan Vlastelica report for Bloomberg News.
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