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ABNB Stock Jumps 11.48%, Airbnb Has High Valuation but Low Market Demand

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by Steve Muchoki · 3 min read
ABNB Stock Jumps 11.48%, Airbnb Has High Valuation but Low Market Demand
Photo: Nasdaq / Twitter

Analysts at Truist Securities initiated coverage of Airbnb stock with a below-market target price of $154 a share.

Airbnb Inc (NASDAQ: ABNB) stock closed Thursday’s trading session at $180.40, up 11.48%. Meanwhile, Airbnb stock had dropped approximately 2.53% during Friday’s pre-market.

Apparently, Airbnb stock benefited from the absence of bad news according to fool.com. Airbnb has significantly been affected by the ongoing coronavirus pandemic that has left the tourism industry devastated beyond imagination. Besides, the company continues to face fierce competition from traditional hotels with the small visitors there are.

However, Airbnb stock remains up approximately 22.89% year-to-date and slightly above 16% in the past month according to MarketWatch. Notably, the company has a reported market valuation of approximately $97.49 billion with 103.68 billion outstanding shares.

Airbnb Stock Market Perspective

Analysts remain wary of the high market valuation with yearly forecast sales of approximately $3.3 billion. “Granted, this is a difficult year for Airbnb, so perhaps next year’s estimate of $4.46 billion is better suited. Still, that leaves shares trading at 19.5 times next year’s revenue expectations,” noted Matthew McCall, former Wall Street analyst.

According to McCall, the company has had to deal with accusations ranging from security to shady deals. Ostensibly, it is difficult for Airbnb to guarantee security and cleanliness with the ongoing coronavirus pandemic.

Inasmuch as the company would like to portray itself as a better alternative and pocket-friendly experience, there are critical aspects of its business model that keeps most of the visitors away.

Airbnb is looking at a time when the airline industry will fully recover to rebound from the pandemic. However, analysts forecast it may take up to three years for the general population to feel confident and travel freely.

Notably, the tourism industry recovery will significantly be dictated by the coronavirus vaccine rollout. Currently, it is estimated approximately 3% of the American population have received a dose. Far from it, only a few of the vaccines have been approved for emergency use, with some still in the clinical test while others awaiting FDA’s approval.

The bleak Airbnb market fundamentals have advised different analysts to lower their forecast on Airbnb stock. According to research by Marketwatch, ABNB stock received an average of a Hold rating from 33 ratings.

Incidentally, analysts at Truist Securities initiated coverage of the Airbnb stock with a below-market target price of $154 a share. Notably, Truist warned that all the positive expectations are already priced into the Airbnb stock.

Another notable call on the Airbnb stock was from research firm Redburn that gave a sell rating and a price target of $74.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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