Airbnb receives bearish calls from analysts after the stock more than doubled when it went public

Wall Street analysts forecast strong growth ahead for Airbnb’s business, but they don’t see much leeway for the stock after more than doubling when it debuted last month.

More than 20 analysts began coverage of the home-sharing site to start the year, according to FactSet and reports sent to CNBC. Two-thirds suggest holding the stock, and five of the 18 analysts who have price targets expect the stocks to fall.

Airbnb sold shares for $ 68 when it went public last month before seeing the stock jump 113% on its first day of trading on December 10, to close at $ 144.71. Pop valued the company at $ 86.5 billion and over $ 100 billion on a fully diluted stock count. The stock was roughly flat for the three weeks following its IPO, before falling 5.2% Monday to $ 139.15.

Morgan Stanley analysts launched a cover with the equivalent of a hold rating and a price target of $ 140, even though the company sees Airbnb as a leader in the accommodation market. Morgan Stanley said that at around 16 times the estimated earnings for 2022, investors can expect a “better point of entry.”

“While we are optimistic about the industry and Airbnb’s business model, we believe the current valuation is fair,” the analysts wrote.

Likewise, Wedbush started coverage with a maintain recommendation and a price target of $ 151, calling the company a “dominant player in an attractive segment.” To justify anything higher, Airbnb would have to head to adjacent markets or wait until “considerable growth is able to catch up with the valuation of the premium offered on the stock from day one,” analysts at Wedbush wrote. .

The most bearish reports came from Deutsche Bank and Stifel, both of which placed targets of $ 130 on Airbnb stock. Stifel said its price estimate was based on a discounted cash flow analysis that took into account the cost of capital and the rate of growth.

Of the seven buy ratings to start the year, the highest price target came from Needham, who expects the shares to hit $ 200 in the next 12 months. Needham analysts predict that the alternative accommodation market could grow five or ten times its size today.

Airbnb is also expected to benefit from “pent-up travel demand” in 2021 after the coronavirus pandemic forced so many consumers to cancel their plans last year, the company said, adding that the company’s business model was particularly attractive because it was not dependent. on Google for traffic. Airbnb said in its prospectus that 91% of its customers in the first three quarters of 2020 came to the site either directly or through unpaid channels.

Needham says its price target is based on a multiple of 22 times revenue in 2022.

“The main upside drivers would accelerate equity gains in the US and Covid would slow down earlier than expected in 21, in our opinion,” they wrote. “Our main concern on the downside is that Covid will turn into an additional multi-year headwind and / or stagnant traffic growth that would prompt the company to invest more aggressively in customer acquisition, presumably via Google. “

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