Airbnb is it worth looking at the company if the vacation is not coming soon?
Airbnb Inc (ABNB) is a service that connects homeowners and tenants. Currently, the site unites 4 million landlords, and the geography covers a record 220 countries.
Recently, the service has been providing services related to housing and “impressions– face-to-face or online classes with local experts. A year ago, Airbnb went public. The IPO was loud and booming: on the first day of trading, the company’s shares soared more than two times. As a result, the capitalization of Airbnb exceeded Booking (BKNG).
Over the year, the quotes have increased by 6%. The market capitalization is $99 billion. By the end of 2021, according to the Bloomberg consensus forecast, revenue will be $5.9 billion (+75%). If we do not consider the low base of 2020, then compared to 2019, revenue growth will be 23%.
According to the results of 2021, EBITDA will be positive again, reaching $1.5 billion (against $3.2 billion in 2020 and $305 million in 2019). The company has every chance to achieve a positive net profit by 2022. The Airbnb business by seasonality: as a rule, the revenue peak falls on the 3rd quarter, the season for travel.
Airbnb’s revenue comes from a single source of income: fees from each booking (a service fee from guests 14% and a commission from the hosts of about 3%). The number of bookings, an essential indicator company, increased by 29% in the 3rd quarter of 2021, which increased revenue by 70%.
Interestingly, coronavirus restrictions played into the hands of Airbnb: there is an increase in the number of bookings within 500 miles of the customer’s home. Can by weak competition: not every city has large hotels after all. In addition, the increasingly popular remote work format also increases the demand for Airbnb services.
Now about the risks. Airbnb may partially lose its advantages over hotel aggregators in the event of tourism recovery after the coronavirus pandemic. Furthermore, Airbnb is subject to reputational risks, primarily related to the personal safety of the participants in the rental transaction. The company by regulatory risk: somewhere, short-term rentals are prohibited, and somewhere the Airbnb service undermines the long-term rental market, which causes concern to the authorities.
We believe that the market currently overvalues Airbnb shares. In particular, this is evidenced by the high value of the forward multipliers P/S 16.3x, EV/EDITDA 59.6x. For comparison, the Booking values of these multipliers are lower: P/S 8.2x, EV/EDITDA 31.2x. As a result, despite the excellent financial results expected at the end of this year, we doubt that the company will repeat similar growth rates in 2022.
