Airbnb results could confirm the stock is a bargain after a 30% plunge | Investing.com

• In this year’s market turmoil, travel stocks presented an attractive risk-reward proposition.
• Airbnb is an example of a good stock that suffered from the massive withdrawal of investors from high-growth stocks.
• Last year was the best year in the company’s history. Everything suggests that the platform is on track to complete another solid year.

The week ahead is packed with earnings reports from some of the biggest travel or transportation companies in the market. Airbnb Inc (NASDAQ:) and Uber (NYSE:) will release their results on Tuesday, while Booking Holdings (NASDAQ:) and Expedia (NASDAQ:) will release them later in the week.

In this year’s market turmoil, travel stocks presented an attractive risk-reward proposition for investors. As demand for room and flight bookings surges after two years of pandemic-related lockdowns and restrictions, the highest inflation in 40 years and the risk of a looming recession have spoiled the party in one of the most popular economic reopening operations.

As a result, some of these tech-driven travel stocks have lost their luster as they fell out of favor. The ETF ETFMG Travel Tech (NYSE:), which tracks an index of companies involved in travel technology, has fallen more than 30% this year despite booming demand for the services offered by these companies.

In this context of uncertainty about future prospects, the sector continues to represent good long-term opportunities. If you are a sidelined investor looking for a good entry point, I think now is not a bad time to make the move. Airbnb, the world’s largest booking platform provider, is my preferred choice in this space.

Since its launch in 2007, Airbnb, headquartered in San Francisco, has consistently shown that it has a solid business model that has succeeded in disrupting the traditional hospitality industry. Still, the company’s stock price, which is down 33% this year, shows that investors aren’t yet fully convinced.

Airbnb, in my opinion, is an example of a good company that is suffering from market weakness and massive investor disaffection for high-growth stocks. The San Francisco-based booking platform has developed a business model flexible enough to deal with different economic challenges.

The most significant evidence of this adaptability came during the pandemic, when demand for travel suddenly plunged, casting doubt on the future of a company that went public during one of the most great health crises of modern history. But Airbnb hasn’t just weathered the pandemic, it’s also thrived.

ABNB Profitability Metrics At All-Time Highs

Source : Investing Pro

The best year ever

The company ended 2021 with what its CEO Brian Chesky called the best year in company history. And everything suggests that the platform is on track to complete another solid year. It reported record second-quarter revenue and told investors the third-quarter period would produce another record revenue. The accommodation rental business also posted a profit in the three months to June as desperate travelers continued to book homes despite rising prices.

In Q3, travelers are likely to book nights and experiences that will jump about 25% year over year, a rate similar to Q2. Even though travelers are taking a bit of a rest from a hectic summer activity, that doesn’t mean Airbnb isn’t worth holding in a long-term portfolio.

Source : Investing Pro

According to a research note, Bernstein wrote that ABNB is on track to become the largest western travel platform over the next five years, noting that the space could experience high single-digit growth in the future. The note adds:

“Airbnb is a unique company in the travel industry, with a triple ditch consisting of an aspirational brand, a unique product set and a loyal customer base, all focused on one of the swim lanes. the fastest in the travel industry.”

It is also expected to be the most profitable online travel agency within two years, beating competitors like Expedia and Booking.com, according to the note.

“Even if you have a negative outlook on travel demand, we would see Airbnb as the best stock to hold given its more defensive stance, faster growth and more attractive valuation on a 4-year forward multiple. .”

One of the reasons that kept investors from buying ABNB was the stock’s high valuation relative to its competitors. But that changed after the recent liquidation. Airbnb now sells at around 10 times its revenue over the past 12 months, up from 14 times in early May.

Conclusion

The current risk aversion environment has made investors wary of high growth stocks in their portfolio and Airbnb is certainly a victim of this prevailing trend. But the company is well positioned to remain a long-term player in the travel industry. The stock’s recent weakness provides an attractive buying opportunity.

Disclosure: At the time of writing, the author does not own the stocks mentioned in this article. The opinions expressed in this article are solely those of the author and should not be considered as investment advice.

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