Airbnb is an American company that owns an online platform for listing short-term rental accommodations worldwide. The company's stock has seen a significant decline recently due to weak guidance. However, Airbnb's current performance remains strong. This presents a good opportunity to buy the company's shares at an attractive price. The fair value of Airbnb's stock is estimated at $129.4, implying a growth potential of 10.7%.
Investment thesis
🔼 Strong Business. Airbnb's Q2 2024 results were quite solid. The company's revenue grew by 11% y/y, reaching $2.75 billion, driven by both an increase in the number of booked nights and the average daily booking rate. Net income decreased by 14.6% to $555 million, mainly due to deferred tax charges. The company's free cash flow for Q2 2024 amounted to $1 billion, 16% higher than the same period a year earlier. Additionally, during this quarter, the company repurchased $749 million worth of its own shares. For the next quarter, Airbnb expects revenue growth of 8-10%, which is a good pace but significantly lower than the market expected.
🔼 Attractive Valuation. The company's disappointing guidance led to massive sell-offs of its stock, which significantly lowered its current valuation and created attractive conditions for purchase. Currently, Airbnb is valued at 26.8 times expected annual earnings, significantly below its 5-year average (64 times expected annual earnings). Additionally, part of the negativity in the stock was driven by the overall market conditions, which are now improving.
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Disclaimer
The information provided above is not an investment recommendation and does not guarantee or promise profitability. Before investing, you should assess the potential risks and rewards and determine your willingness and ability to accept such risks.
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