Airbnb (ABNB) investors took a beating as the COVID-19 pandemic stunted the global travel market last year. For a while, it seemed that the lockdowns could last indefinitely.
Thanks to the rollout of vaccines, however, there’s been a pickup in travel, and that’s good news for Airbnb’s long-term investors.
As the world recovers from the shock of the pandemic, the idea of staying temporarily at someone’s home – or hosting people in one’s home for extra income – is again feasible.
Moreover, according to Airbnb’s CEO, we’re witnessing a historic moment in the travel market right now. Could this be the perfect time to pick up some shares of ABNB stock? (See Airbnb stock charts on TipRanks)
A Quick Look at ABNB Stock
ABNB stock debuted for public trading on December 10, 2020. The company had previously set a price range for the stock at $56 to $60, but then began selling the shares at $68 apiece.
However, most retail traders didn’t get to buy the shares at that low price, as ABNB stock opened at the eye-popping price of $146.
Amazingly, this was the third-biggest IPO of the year at that time. Folks who bought and held the shares did well over the following weeks, as the stock price hit a 52-week high of $219.94 on February 11, 2021.
That’s when the enthusiasm wore off, however, as ABNB embarked on a multi-month decline. As of closing on July 26, the share price was at $142.
In other words, you may have an opportunity to buy the stock at the same price as on its first day of trading.
A point of concern is that Airbnb’s trailing 12-month earnings-per-share is -$14.68. The investors will definitely want to see that number turn positive, preferably by the end of the year.
Weathering the Storm at Airbnb
One thing that Airbnb’s shareholders will be glad to hear about is the confidence of the company's CEO and co-founder, Brian Chesky.
In a recent interview, Chesky recounted how he had “felt like the captain of a ship that had been hit by a torpedo” when the COVID-19 pandemic struck.
Apparently, in early 2020, Airbnb’s business in China dropped by 80%. Moreover, the company received over $1 billion in refund requests.
Talk about a nightmare! Yet, the company took it in stride by giving Airbnb’s guests a refund if they couldn’t travel.
That was a classy move because it showed respect to the customers, even while it caused Airbnb to take a financial hit in the short term.
Moreover, the company made the smart move of reducing its expenses. In particular, Airbnb cut approximately $800 million in marketing costs on a run-rate basis.
Also, Airbnb’s executives took half-salaries, and the founders stopped taking salaries altogether. These actions should inspire confidence in the company's shareholders, because it shows that Airbnb will do whatever is necessary to keep the company on solid financial footing.
Airbnb Going Really Strong
Fast-forward to the summer of 2021, and Airbnb remains both adaptable and resilient. Amazingly, the company conducts its business in 100,000 communities, throughout almost every country in the world.
According to Chesky, the current recovery is “going to be the travel rebound of the century.” That might sound like an overstatement to some people, especially with the Delta variant strain spreading.
Still, Chesky’s point should be acknowledged as valid. As he points out, “We’ve never seen travel drop 80%. At the aggregate level, travel already is approaching 2019 levels globally.”
What Chesky sees here is the big picture, and it’s a picture that’s getting brighter. Domestic travel is “going really strong,” and this is proof positive that business is improving, even if it’s not quite booming yet.
Wall Street Weighs In
According to TipRanks’ analyst rating consensus, ABNB is a Moderate Buy, based on 13 Buy and 13 Hold ratings. The average Airbnb price target is $173.17, implying 21.95% upside potential.
As a corporate insider, Chesky can see what most people do not: the ins and outs of the travel market.
His confidence should inspire investors to consider ABNB stock today. The recovery in the market isn’t complete yet, but that’s precisely why the stock still has room to run.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.