Investors Heavily Search Airbnb, Inc. (ABNB): Here is What You Need to Know

Airbnb, Inc. (ABNB) has been gaining significant interest from investors lately. This engagement suggests that it's a good time to explore key factors impacting the stock's short-term outlook.

In the last month, Airbnb shares have increased by +1.3%. However, this performance lags behind the broader market, with the Zacks S&P 500 composite rising by +3.8%. Moreover, within the Zacks Leisure and Recreation Services sector, which includes Airbnb, the industry has seen an impressive gain of +10.6%. The important question now is: what direction might the stock take in the future?

While news reports or speculations regarding big shifts in a company's operations often create immediate trends and fluctuations in stock prices, fundamental aspects usually play a more significant role in long-term investment decisions.

Earnings Estimate Revisions

At our analysis, we consider changes in earnings projections to be a critical factor. We believe that a stock's true value reflects the present worth of its anticipated earnings.

Our evaluation hinges on how analysts are adjusting their earnings forecasts in light of the latest business developments. When earnings forecasts rise, so does the estimated value of the stock. If that estimated value surpasses the current market price, investors tend to buy, leading to a price increase. Various studies suggest a strong correlation between alterations in earnings estimates and short-term stock price trends.

For the upcoming quarter, Airbnb is anticipated to report earnings of $0.62 per share, reflecting a decline of -18.4% compared to the same quarter last year. Over the past month, the Zacks Consensus Estimate has decreased by -18%.

For the current fiscal year, the consensus expectation stands at $4.02 per share, signifying a decrease of -44.5% from the previous year. This estimate has fallen by -3.6% in the last 30 days.

Looking ahead to next fiscal year, the consensus estimate is $4.50, representing a recovery of +11.9% from the projected earnings of the past year. However, this estimate has also dropped by -6.5% recently.

Our proprietary stock rating system offers a more definitive view on a stock's price trajectory. The Zacks Rank leverages earnings estimate revisions to provide insights. Due to recent significant changes in consensus estimates and other related factors, Airbnb currently holds a Zacks Rank #3 (Hold).

12 Month EPS

Revenue Growth Forecast

While earnings growth is a vital measure of a company's financial health, sustainable earnings growth is largely reliant on sales growth. It is crucial to understand a company’s revenue growth potential.

The consensus sales estimate for Airbnb is $2.43 billion for the current quarter, indicating a year-over-year increase of +9.4%. Expectations for the current and upcoming fiscal years stand at $11.05 billion and $12.26 billion, forecasted to grow by +11.4% and +11% respectively.

Last Reported Results and Surprise History

In the latest quarter, Airbnb reported revenues of $3.73 billion, reflecting a year-over-year increase of +9.9%. The earnings per share (EPS) for this period was $2.13, down from $2.39 in the same quarter last year.

Compared to the Zacks Consensus Estimate of $3.72 billion, the actual revenue translation resulted in a positive surprise of +0.26%. However, the EPS fell short of estimates by -1.84%.

In the previous four quarters, Airbnb exceeded EPS estimates on two occasions and revenue estimates on three occasions.

Valuation

Effective investment decisions can’t be made without assessing a stock's valuation. Determining whether a stock’s current price accurately reflects its intrinsic value and growth potential is crucial for future performance predictions.

Evaluating a company's valuation multiples—like price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF)—in relation to its historical values can help investors decipher if a stock is appropriately valued, overpriced, or undervalued. Additionally, comparing these metrics with industry peers lowers the guesswork about the stock's pricing rationality.

As part of the Zacks Style Scores system, the Zacks Value Style Score assesses stocks based on traditional and non-traditional valuation metrics, categorizing them from A to F (with A being the most favorable). Airbnb has a grade of D, suggesting that it is currently trading at a premium compared to its peers.

Conclusion

Considering the insights shared in this article may assist in evaluating the current market buzz surrounding Airbnb. However, the stock's Zacks Rank #3 indicates it is expected to perform in line with the wider market in the near term.

Airbnb, Stocks, Estimates