The Airbnb stock price has had a difficult time as investors worry about inflation, valuation, and a slowdown in the company’s earnings. The stock is trading at $100, which is about 53% below the highest point in November last year.
The decline has pushed the company’s market cap to about $64 billion, lower than its all-time high of over $100 billion. Other travel stocks like Priceline, Trip.com, Marriott, and TripAdvisor have also pulled back in the past few days.
Travel demand amid inflation
The Airbnb stock price has been in a strong downward trend as investors remain concerned about several factors. For example, with inflation surging around the world, there are concerns that many travelers will postpone their travel plans.
Besides, most people are saving money since their salaries are no longer covering all their expenses. Surveys show that most Americans are living from paycheck to paycheck.
However, recent data show that the travel industry is doing better than what most analysts expect. For example, most airlines like Delta, United, and Southwest have recently published strong results. Further, there are signs that millions of Americans are traveling this summer.
For example, about 40% of Americans are planning for leisure while traveling revenue hit a pandemic-era high of $101 billion in May. Further, in a statement, Bank of America’s CEO, Jay Moynihan, said that consumer clients’ balance remained at elevated levels.
Airbnb stock price has also crashed because of the impact of a strong US dollar. Since the company generates most of its income abroad, there are concerns that it will report weaker results in the coming months. That’s because the US dollar surged to the highest level in more than 20 years last week.
Is Airbnb a good investment?
From a fundamental perspective, I believe that Airbnb is a good company to invest in for several reasons. First, while it faces strong competition from the likes of Booking and Expedia, it still maintains a strong market share in the vacation rental industry.
The company had a gross booking value of over $17 billion in the first quarter while the number of nights and experiences booked jumped to over 101 million. Its revenue jumped by 70% YoY to over $1.5 billion while its first-quarter loss narrowed to $19 million. Further, its free cash flow rose to over $1 billion.
Airbnb will publish its results on August 2nd of this year. Analysts polled by Reuters expect the numbers to show that the company’s revenue jumped to more than $2.10 billion in the second quarter. They also expect that the firm’s profit rose to about 52 cents per share.
Second, Airbnb has a good brand recognition in the vacation rental industry. It is like the Google of the sector. Further, the firm’s valuation has become relatively stable amid the recent stock crash. Most importantly, the company has an asset-light business model since it does not own rental properties.
Airbnb stock price forecast
The daily chart shows that the Airbnb share price has been in a strong bearish trend in the past few months. The sell-off accelerated after the shares crashed below the important support being at $130.36. This was a notable level since it was the lowest level in May and June last year and June this year.
The ABNB stock price has moved below the 25-day and 50-day moving averages. Therefore, while I am bullish on Airbnb, I expect that the bearish trend will continue as long as it is below the two moving averages. In the long-term, I suspect that the stock will bounce back as bulls target the key resistance level at $130.