Airbnb (ABNB): Buy, Sell, or Hold Post Q4 Earnings?

Airbnb trades at $117.52 per share and has moved almost in lockstep with the market over the last six months. The stock has lost 10.9% while the S&P 500 is down 6.9%. This might have investors contemplating their next move.

Following the pullback, is now the time to buy ABNB? Find out in our full research report, it’s free.

Why Are We Positive On Airbnb?

Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ:ABNB) is the world’s largest online marketplace for lodging, primarily homestays.

1. Nights and Experiences Booked Skyrocket, Fueling Growth Opportunities

As an online travel company, Airbnb generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.

Over the last two years, Airbnb’s nights and experiences booked, a key performance metric for the company, increased by 11.8% annually to 111 million in the latest quarter. This growth rate is strong for a consumer internet business and indicates people love using its offerings.

2. Outstanding Long-Term EPS Growth

Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Airbnb’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Airbnb has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the consumer internet sector, averaging an eye-popping 39.6% over the last two years.

Final Judgment

These are just a few reasons why we're bullish on Airbnb. After the recent drawdown, the stock trades at 17.4× forward EV-to-EBITDA (or $117.52 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More Than Airbnb

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