Airbnb, Inc.

ABNB Details

Airbnb, Inc. (NASDAQ: ABNB) is a stay-and-experience platform that links hosts and guests to rent places and activities online or via mobile devices. It guides hosts through the listing process and provides a suite of tools to help them manage their listings, including scheduling, merchandising, integrated payments, community assistance, host protections, price advice, and review comments. It now boasts 4 million hosts who have welcomed over 1 billion guests to over 100,000 cities in nearly every country and region on the planet.

9MFY21 Results:

• Boost in Revenues: ABNB witnessed a massive increase of 77.04% in its revenues to USD 4.46 billion during 9MFY21 (ended September 30, 2021) compared to USD 2.52 billion during 9MFY20, due to the recovery in Nights and Experiences Booked combined with higher Average Daily Rates (ADRs)
• Decline in Net Losses: The company recorded net losses of USD 406.54 million during 9MFY21 vs. USD 696.87 million during 9MFY20.
• Healthy Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including marketable securities) of USD 7.92 billion and total debt of USD 1.98 billion.
• Progress in GBV: ABNB reported a Gross Booking Value (GBV) of USD 35.6 billion during 9MFY21 from USD 18.0 billion during 9MFY20.

Key Risks:

• Foreign Exchange Rate Risk: In FY20, the ABNB earned 50% of its income in currencies other than the US dollar, exposing it to currency volatility. Even if currency forward contracts have been used to mitigate price volatility, the risk exists. As a result, any adverse change in the exchange rate would hurt the company's bottom line.
• Seasonal Business: The first, second, and third quarters of a typical year, according to ABNB, have more nights and experiences booked than the fourth quarter, as visitors intend to travel during the peak travel season, which is in the third quarter for North America and EMEA. As a result, any drop in predicted quarter revenues, whether due to a shift in consumer choices, host activity patterns, or Covid-19 concerns, could significantly impact the company's full-year results.

Outlook:

• Optimistic Outlook: In a shareholder letter, ABNB predicted a solid Q4 with increasing GBV growth, ongoing revenue strength, and increased Adjusted EBITDA margins compared to Q3FY21. As of the end of September, it had over 40% more nights booked for Thanksgiving week in the US than it had at the same time last year. And the high travel demand is expected to continue far beyond 2022.

Valuation Methodology: EV/EBITDA Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

ABNB Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

ABNB stock price has surged 42.27% in the past six months and is leaning towards the higher band of the 52-week range of USD 121.50 to USD 219.94. The stock is currently trading far above its 50 DMA level, and its RSI Index is 80.71, indicating an overbought zone. We have valued the stock using the EV/EBITDA-based relative valuation methodology and arrived at a target price of USD 185.62.

Considering the significant uptick in the stock price and other technical indicators, we believe the decent business fundamentals are adequately reflected at the current trading levels. Hence, we recommend a "Sell" rating on the stock at the current price of USD 208.65, up 3.48% as of November 08, 2021, 10:12 AM ET.

* All forecasted figures and Industry Information have been taken from REFINITIV.

* The reference data in this report has been partly sourced from REFINITIV.