Airbnb Stock Forecast 2025
In late 2019, dominant home-sharing platform Airbnb (NASDAQ: ABNB) publicly announced that it planned to go public in 2020.
The news came just a few months before the novel coronavirus outbreak, which quickly evolved into a full-blown pandemic by early 2020. Airbnb had initially hoped for a debut in early 2020, but delayed the timeline as the crisis decimated the travel industry.
The company ended up going public with a traditional IPO in December 2020, achieving its goal with just a couple of weeks to spare. Expectedly, Airbnb’s business took a massive hit as travel demand evaporated, forcing the company to lay off nearly a quarter of its workforce. As many countries make progress with vaccinations, the travel industry is finally starting to rebound.
Airbnb stock is currently trading at approximately $146, or 27 times revenue. Wall Street analysts have an average price target of $163.77, with a high of $220 and a low of $74.
Airbnb Stock Forecast 2021
After being forced to make tough choices last year in order to survive, Airbnb was able to remove unnecessary distractions. The company’s priority in recent months has been to prepare for the inevitable rebound in travel demand.
“Through the crisis, we also sharpened our focus,” CEO Brian Chesky said on the company’s first earnings call as a public company. “We made many difficult decisions while staying true to our core principles, and we became a stronger company as a result.”
Many of Airbnb’s core operating metrics are roaring back. Nights and Experiences Booked in the first quarter increased 13% to 64.4 million, while gross booking value (GBV) skyrocketed by 52% to $10.3 billion.
It’s worth noting that year-over-year comparisons are less relevant than under normal circumstances. As a result, the company has said that these two core metrics will continue to be “volatile and unreliable measures of the steady-state growth of our business.”
Despite encouraging indications regarding travel demand, Airbnb has declined to provide full-year guidance for 2021 due to ongoing macroeconomic uncertainties related to the COVID-19 pandemic, which continues to ravage many countries around the world. As Airbnb operates in nearly every country in the world, it has exposure to ongoing pandemic risks.
However, Airbnb did provide investors with its strategic priorities for 2021, which include more marketing to educate people of the benefits of hosting, expanding the number of hosts on the platform, and improving the overall guest experience.
Airbnb Stock Forecast 2025
While much uncertainty lingers, analysts are modeling for steady top-line growth in the years ahead. Sales could grow at a compound annual growth rate (CAGR) of 18% through 2025, according to Wall Street’s estimates.
Here are the consensus estimates for Airbnb’s revenue for the next five years.
Like many tech unicorns, Airbnb is not currently profitable. On an adjusted basis, positive earnings per share (EPS) could be on the horizon.
|Year||Adjusted EPS||YOY Growth|
Once Airbnb reaches profitability, adjusted EPS starts to scale rapidly.
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Airbnb Stock Forecast 2030
Somewhat ironically, there may be relatively more certainty in Airbnb’s long-term forecasts than near-term predictions due to the pandemic. Market conditions in the travel sector are extremely volatile right now, with outbreaks flaring up due to the emergence of COVID-19 variants.
Here is where analysts see Airbnb’s bottom line heading near the end of the decade.
|Year||Adjusted EPS||YOY Growth|
Airbnb Bull Case
In order to continue posting strong growth rates going forward, Airbnb will need to continue expanding its platform by recruiting more hosts that provide the supply of rental homes. Previous guests are actually Airbnb’s largest source of new hosts, creating a virtuous cycle of engagement.
The way people use Airbnb is also changing dramatically. The broad shift to remote work, which many experts believe is here to stay in varying degrees, offers people more flexibility to live and work from anywhere they want.
Long-term stays (28 nights or more) now represent nearly a quarter of all nights booked on the platform. Airbnb is catering to these new use cases by innovating new features for travelers with flexibility.
The expansion into experiences and excursions is also still in the early stages. Ongoing execution in this highly complementary offering will be critical in driving future growth. At the same time, Airbnb is even investing in the traditional hotel experience, acquiring hotel-booking platform HotelTonight in 2019.
Airbnb has created an unparalleled brand within the travel industry, while it evolves into a comprehensive end-to-end travel booking platform.
Airbnb Bear Case
The COVID-19 pandemic is a once-in-a-century event that has upended the world, but public health experts had been warning for years that humanity was not prepared. As some of the underlying causes of virus outbreaks—such as continued intrusion into wild habitats—continue unabated, there is always a risk of another crisis in the future.
The next pandemic might not take another hundred years to occur, and travel companies could get crushed again.
Airbnb has also had its fair share of controversies, such as when crimes or tragic events occur during bookings. The company will need to continue aggressively investing in its trust and safety operations, which requires navigating numerous regulatory landscapes in every country in which it operates. That is a complex and expensive task that will continue for the foreseeable future.
Additionally, there have been concerns that Airbnb may not live up to its lofty valuation, as investors are currently pricing in robust growth expectations. Even if Airbnb continues to grow, it could still fall short, leading to disappointing returns.