Airbnb Stock Forecast & Analysis

Written by Sean GraytokUpdated: 8th May 2022
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This Airbnb Stock Forecast will examine ABNB’s investment potential, and help you decide if it’s worthy of an allocation in your portfolio. 

Airbnb Stock Forecast: Background

Airbnb is a technology platform that connects buyers and sellers of home and room rentals. The company uses artificial intelligence — specifically machine and deep learning – to provide better rental information to users on both sides of the transaction.

Airbnb was founded in 2007 by Brian Chesky. It started from humble beginnings and used to rent out single air beds for $10 a night.

Today, the company is valued at $100+ billion and has facilitated nearly a billion guest arrivals.

Airbnb Stock Forecast: Investment Potential

#1. Decentralization of Everything

Covid-19 might have hurt Airbnb in the short-term, but it also accelerated and normalized the “Decentralization of Everything” – including where people choose to live and work.

The pandemic forced knowledge workers out of the office and into their homes. Then came the question: “If I can work remotely from 20 miles away, can I work remotely from 500 miles away?”

People and companies began to reconsider the necessity of major cities like New York and San Francisco – and they started to move.

Airbnb accommodated this demand during the pandemic and will continue to do so as homeownership becomes less permanent.

The idea of a stranger giving car rides was outrageous just a few years ago. Now, there are billions of Uber trips every year.

We believe this same transformational shift is occurring with homes. Airbnb created a new market of democratized hospitality and will be rewarded.

#2. Total Addressable Market

Airbnb believes it has a “serviceable addressable market” of $1.5 trillion and a total addressable market of $3.4 trillion. It currently operates in 200+ countries around the globe.

The company had just 54 million guests in 2020, yet there are billions of travelers worldwide. This represents a massive opportunity for Airbnb and its stock price.

Sure, companies often loosely define their “total addressable market”, and Airbnb has every excuse to do so, considering there are billions of homes worldwide.

But it’s an exciting metric for investors and indicates that the company is focused on more than just home rentals.

#3. Brand Awareness + Noun & Verb Status

Combining Airbnb’s total addressable market with its brand awareness makes this an exciting growth stock.

Airbnb is just years into disrupting the travel industry, and it’s already the default platform for bookings.

The company has also reached “noun & verb status”, – which validates and reinforces its network effects: “We got an Airbnb” or “We can Airbnb instead”.

Verb status, in addition to brands becoming larger than the product (Kleenex and tissues), is cherished territory amongst disruptor companies. Consider the following:

  • “Venmo me.”
  • “Google it.”
  • “Let’s Uber.”
  • “Want to Zoom?”

The company is enmeshed further into the culture each time it’s used as a verb.

#4. Digitization Proof

A large portion of software aims to reduce the role of humans in the physical world. Whether it’s automation or social media, AI and new technology are replacing industries and changing human behavior.

Airbnb is unique – it uses software to create more real-world interactions.

Yes, software is eating the world, but people are still going to need a place to live.

Side note: Facebook Groups became wildly popular, but the company became frustrated when it couldn’t monetize those off-platform interactions.

We point this out to highlight the range of successful distribution platforms and provide some food for thought.

These are completely different platforms with different goals.

#5. New Products and Offerings

Speaking of distribution, Airbnb will continue to add new products and offerings to its platform. It has the reach and brand awareness to launch new initiatives and seamlessly convert new and existing users.

For example, Airbnb could offer short-term office rentals or begin buying its own property. The company recently revealed that it is allocating tons of capital to new projects.

Distribution is everything in today’s economy, and Airbnb’s platform is suited to scale into new markets.

Airbnb Stock Forecast: Economic Moat

There’s going to be some overlap when we consider Airbnb’s investment potential and its moat.

However, Airbnb’s differentiator is the combination of its brand awareness and distribution capabilities.

Airbnb Moat = Brand Awareness + Distribution

This enables the company to enter new markets and justify its lofty valuation.

Hosts and guests have an affinity for Airbnb that turned the company into a noun and a verb.

Whoever thought a travel website would enter the vocabularies of boomers and Gen Z alike?

Airbnb Stock Analysis: Q3 Earnings Report

Airbnb reported Q4 2021 earningsin February. Let’s see the results and how investors reacted to the quarterly earnings call:

  • Earnings per share: 8 cents vs 3 cents expected
  • Revenue: $1.53 billion vs $1.46 billion expected

Airbnb reported 73.4 million nights and experiences booked in the fourth quarter of 2021, which represented an 8% decrease from the same quarter a year prior. 

The company expects Q1 2022 financial numbers to be favorable, calling for revenues to reach as high as $1.48 billion, which is more than the analysts expected to hear. 

Investors reacted favorably to the call, and shares increased 4% in after hours trading.

Airbnb Stock Forecast: The Competition

The barriers to the vacation rental space are low because it’s all about data and distribution. This is why Google has become one of Airbnb’s top competitors.

Let’s look at the complete roster:

  • Google (GOOG)
  • Expedia (EXPE)
  • Booking Holdings Inc (BKNG)
  • (TCOM)
  • Zillow (Z)
  • TripAdvisor (TRIP)
  • Baidu (BIDU)
  • Trivago (TRVG)

Vrbo is Airbnb’s main competitor – the company is owned by Expedia and closely resembles the Airbnb model.

Expedia stock trades at more conservative levels,  but its revenue is slowing at an alarming rate.

Zillow is another stock to consider that is well off its highs. Admittedly, buying into shares of Zillow after its last six months takes some guts. 

Airbnb Stock Forecast: The Bear Cases

#1. Private Market Gains

The Airbnb IPO felt like the gains were being had in the private markets. Promising companies like Airbnb are staying private longer and going public at much higher valuations.

Airbnb opened at a valuation of around $100 billion – much of the company’s growth occurred when the public could not get a piece.

Similar questions were asked at Coinbase’s IPO, and we expect similar skepticism when Stripe eventually goes public. 

#2. Profitability

Bears might turn to Airbnb’s inconsistent profitability. While the company has turned a profit in previous quarters, some question why a capital-light business can’t make money.

Airbnb Brian Chesky said, “We think this model has really good, long-term inherent margins built into it.”

He listed several investments that were costly but crucial to Airbnb’s early success:

  • Design a system of trust
  • Build a payment system
  • Invest in trust and safety
  • Localize a product in 200+ countries

Chesky believes that the company has surpassed a key investment period and will generate consistent profits moving forward.

If the recent quarter was any indication, Chesky appears to be right. 

#3. Supply and Demand Imbalance

Airbnb CEO Brian Chesky says that the company will need millions of more hosts to meet its surging demand. This dilemma sparks an interesting question for Airbnb.

There’s no shortage of travelers willing to stay in verified rentals, but are enough people willing to open up their homes to strangers to sustain Airbnb’s growth?

Many believed this would be an obstacle for Uber, but a person’s home is far more intimate than their Toyota Camry. Airbnb has to overcome a much larger obstacle.

Having too much demand “sounds like one of them good problems “, but it’s nonetheless a puzzle Airbnb will have to solve.

Airbnb Stock Allocation in Your Portfolio

The optimal amount of ABNB stock in your portfolio depends on dozens of personal factors. However, these questions might help you arrive at the right allocation:

  • Is Airbnb safe from disruption?
  • Can Airbnb achieve consistent profitability?
  • What’s wrong with a hotel?
  • Is the platform “sticky” enough?
  • Will Google’s platform, AI, capital, and ambition enable it to eat away at Airbnb’s travel market share?
  • Will anything be done about cleaning and service fees that pop up two weeks after your stay?
  • It’s already a $100 billion dollar company – is there more upside somewhere else?
  • Can ABNB successfully enter new markets?
  • Will a supply and demand imbalance between hosts and guests limit growth?

Airbnb Stock Forecast: FAQs

Is Airbnb a buy right now?

Airbnb is a buy right now if you’re willing to be a long-term shareholder. Many Wall Street analysts are bullish on Airbnb’s long-term potential but struggle to justify its current valuation. It’s difficult to answer “Is Airbnb a buy right now?” because each investor has different goals and time horizons.

Bottom Line: Airbnb Stock Forecast

Technology will forever update the “norms” we establish in society – why would hospitality be impervious to innovation?

Airbnb is changing the way we look at our homes – the financialization of everything is here.

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This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Airbnb stock.

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and leading expert in investing and financial management. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and technologies that are improving the world.