Investors Heavily Search Airbnb, Inc. (ABNB): Here Is What You Need to Know

Airbnb, Inc. (ABNB) has been gaining increased attention from investors recently. It is important to review various factors that may influence the stock's performance in the near future.

In the past month, the stock has recorded a return of +1.3%, which is lower than the +3.8% gain of the Zacks S&P 500 composite. During this same time frame, the Zacks Leisure and Recreation Services industry, where Airbnb operates, has seen a more significant increase of 10.6%. This raises the question: how might Airbnb's stock move going forward?

Typically, news stories or speculation regarding major changes within a company can cause its stock to trend and potentially change its price quickly. However, foundational elements ultimately drive the long-term buy-and-hold strategies of investors.

Revisions to Earnings Estimates

At this stage, our analysis emphasizes the importance of earnings projections. The fair value of a stock is primarily determined by the present value of its anticipated earnings over time.

This analysis relies heavily on how analysts are adjusting their earnings forecasts for the company in light of current market trends. When an estimate for a company's earnings improves, so does the projected fair value of its stock. Conversely, if the fair value exceeds the current market price, investors may be encouraged to buy, pushing the price up. Research indicates a strong link between earnings estimate revisions and short-term stock price movement.

For the upcoming quarter, Airbnb's anticipated earnings are $0.62 per share, representing a decline of -18.4% compared to the same quarter last year. Over the past month, the Zacks Consensus Estimate for this quarter has decreased by 18%.

Looking at the current fiscal year, the consensus earnings estimate is $4.02 per share, which reflects a significant drop of -44.5% from the previous year. The estimates have decreased by 3.6% in the last month.

However, for the next fiscal year, earnings are expected to rebound slightly with a consensus estimate of $4.50 per share, suggesting an increase of +11.9% compared to what is reported for the current year. This estimate has dropped by 6.5% recently.

Utilizing a comprehensive stock-rating tool that considers earnings estimate revisions, it appears that Airbnb holds a Zacks Rank of #3 (Hold). This ranking suggests a neutral outlook, reflecting several underlying changes in the consensus estimates.

Revenue Growth Forecast

While earnings growth is a crucial aspect of assessing a company's financial stability, revenue growth is equally important. A company's ability to grow its earnings cant be sustained without a corresponding increase in revenues.

For Airbnb, the sales estimate for the current quarter stands at $2.43 billion, marking a year-over-year increase of +9.4%. For the current fiscal year and the next, the estimates are $11.05 billion and $12.26 billion, representing growth rates of +11.4% and +11%, respectively.

Last Reported Results and Surprise History

In the last quarter, Airbnb achieved revenues of $3.73 billion, which was a +9.9% change from the previous year. The earnings per share (EPS) stood at $2.13 for the same period, down from $2.39 a year earlier.

Comparatively, the revenue reported surpassed the Zacks Consensus Estimate of $3.72 billion, resulting in a positive surprise of +0.26%. However, the EPS fell short by -1.84% compared to the consensus estimate.

Over the last four quarters, Airbnb has exceeded EPS consensus estimates on two occasions and has exceeded revenue expectations three times.

Valuation

Assessing a stock's valuation is essential when making investment decisions. It is important to determine if a stock's current price accurately reflects the intrinsic value of the business and its future growth potential.

To evaluate this, one can compare a company's price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF) ratios against both its historical averages and those of its competitors.

Using the Zacks Style Scores system, stocks are rated from A to F based on their value metrics, providing a clearer picture of whether a stock is overvalued, fairly valued, or undervalued. Currently, Airbnb has a Zacks Value Style Score of D, indicating that it is trading at a higher premium compared to its peers in the industry.

Bottom Line

Considering the information covered here alongside insights from other analyses may help investors in deciding whether to heed the current market interest surrounding Airbnb. The Zacks Rank of #3 suggests that in the near term, the stock may perform similarly to the broader market.

Airbnb, Stock, Earnings