- Wall Street analyst notes on
Airbnb are beginning to roll in one month after the company completed its high profile IPO to raise $3.5 billion. - Since the December 10 debut, shares of Airbnb have surged 116% from its offering price of $68 per share, giving it a valuation of more than $100 billion.
- Here's what three Wall Street analysts think about Airbnb and its long term growth prospects.
- Visit Business Insider's homepage for more stories.
One month after Airbnb's high profile IPO that raised the company $3.5 billion, the home sharing company is beginning to receive coverage from Wall Street analysts.
Airbnb has surged 116% since its public debut at $68 per share, giving it a valuation of more than $100 billion. But the company is still one to two years away from profitability, according to Goldman Sachs.
Here's what three Wall Street analysts think about Airbnb and its long term growth prospects.
1. Goldman Sachs
Rating: Neutral
Price Target: $146.80
"Airbnb allows a property owner in once city to generate revenue to secure housing in another city. To the extent that a more mobile workforce will be a major feature of post-pandemic society, Airbnb will be a critical part of the ecosystem that enables it. We see this, and the platform optionality it creates, along with opportunities in travel and experiences, as one of the most significant early-stage growth propositions in the Internet sector," Goldman said.
"With management having significantly reduced costs in the early days of the pandemic, aligning the cost structure around the core alternative accommodations business, the economics of the model at scale are among the most favorable that we see in the online travel space," Goldman said.
The key risks to Airbnb include regulation, competition, rising customer acquisition costs, and weaker travel recovery from the COVID-19 pandemic, according to Goldman.
2. Credit Suisse
Rating: Neutral
Price Target: $156
"Over the past decade, alternative accommodations as a share of total lodging have increased from ~6% to ~11% dollar share. This represents in our view an ongoing shift in consumer preference away from traditional to alternative lodging. We expect this substitution effect to accelerate further due to pandemic-driven changes in behavior, with incremental consumers likely trying the category for the first time and choosing to stick after a positive experience," Credit Suisse said.
"Currently, Airbnb charges the guest 12% and individual hosts 3% versus traditional operators levying the entirety of the fees on the property owner. We therefore see ample opportunity for the company to increase monetization in the long term from: 1) payment processing fees - Airbnb as the merchant of record in the transaction bears the payment processing charges, which it can pass on to the hosts, and 2) sponsored listings - optionality to launch an advertising tool for hosts, similar to Amazon, eBay, and other marketplaces," the note said.
In a "Blue Sky" scenario, Credit Suisse sees Airbnb
3. Canaccord Genuity
Rating: Buy
Price Target: $175
We "expect Airbnb's scale and platform advantages to cement an early lead in supply liquidity and demand, enabling it to further distance itself from potential competitors. The stock is up 116% from its IPO price, and the premium valuation may limit near-term upside. However, we see a long runway for growth and significant opportunity to create more leverage in the model over time," Canaccord Genuity said.
"Like most of the travel industry Airbnb faced an immediate spike in cancellations and a freeze on new bookings at the onset of the pandemic, but unlike many of its competitors the company saw a sharp recovery of demand beginning in May. Domestic travel held up particularly well, with consumers increasingly looking to rent whole homes in destinations within driving distance, helping to offset weakness in international travel. With vaccine distribution in progress, we are increasingly confident that Airbnb's 2H21 results should approach pre-COVID levels, with many years of robust revenue growth ahead, and we see upside potential from take rate expansion along with significant operating leverage inherent in the company's asset-light model," Canaccord Genuity said.