Airbnb Inc. shares fell Monday after a cluster of analysts largely avoided suggested that investors purchase the stock after it landed on Wall Street in the biggest initial public offering of 2020.
Banks’ investment analysts largely abide by a voluntary post-IPO “quiet period” before rating a stock, and nearly 20 analysts offered their thoughts on Airbnb
on Monday morning after that period expired. Of 19 analysts who initiated coverage of the stock, 12 rated it a hold, six said buy and one said it is overweight, according to FactSet.
Shares in the lodging-rental platform fell as much as 9% in the first session of 2021, before gaining back some of their losses. They were trading nearly 5% lower late in the session, amid a down day for stocks to start the new year.
Airbnb lost the bulk of its business for two months immediately following the rise of the pandemic last year, causing the company to put its planned initial public offering on hold. But its rebound because of domestic travel and long-term stays propelled the company to what is now an $88 billion market capitalization.
The analysts who rated the stock a buy say the San Francisco-based company has a unique offering and opportunity as travel continues to be affected by the coronavirus pandemic.
“The pandemic continues to disrupt travel demand but has also highlighted the uniquely adaptable/resilient nature of Airbnb’s business,” D.A. Davidson analyst Tom White wrote in a note to investors. He has a $172 price target for the stock.
Because of what they view as Airbnb’s differentiated offerings, many analysts are bullish about the company’s long-term growth prospects, with D.A. Davidson saying Airbnb has a $2 trillion-plus market opportunity and a few analysts expecting long-term revenue growth of 20%.
Raymond James analyst Aaron Kessler, whose market-perform rating is equivalent to hold, wrote that his “positive fundamental view” is based partly on “a large nights and experiences [total addressable market] that is increasingly shifting to alternative accommodations.” Kessler does not have a price target.
Besides the pandemic, analysts mentioned the following investment risks: regulation, increased competition and the economy.
Regulatory concerns include restrictions on short-term rentals, which some cities have enacted. Airbnb has a variety of competitors, including similar home-rental platforms, huge booking sites, travel agencies and more.
“Periods of economic weakness or uncertainty could impact global travel, reducing demand for the company’s products and services,” wrote Canaccord Genuity analysts Maria Ripps and Michael Graham, who have a buy rating on the stock. Their price target is $175.