Airbnb downgraded as 'valuation remains expensive'

November 13, 2024 01:43 AM AEDT | By Investing

Google News:

Airbnb downgraded as 'valuation remains expensive'

Recent News

World Digital Introduces Innovative E‑Commerce Strategies Amid Global...

Alex Miller Keeps Classic Country Flame Burning With Alan Jackson Song...

Trump earns over $600 million from crypto, holds assets worth at least...

Oil in biggest gain since 2022 as Israel hits Iran, but Citi warns gai...

Investing.com -- Phillip Capital downgraded Airbnb (NASDAQ:ABNB) to Reduce from Neutral on Tuesday, citing high valuations and limited near-term upside due to rising operational costs.

While Airbnb reported strong Q3 2024 results with revenue up 10% year-over-year to $3.7 billion, driven by robust summer travel, Phillip Capital expressed concerns about Airbnb’s valuation, noting that it trades at a “significant premium to the market and OTA rivals” like Booking Holdings (NASDAQ:BKNG) and Expedia (NASDAQ:EXPE) Group.

With Airbnb’s current price-to-earnings ratio for fiscal year 2025 at 31x, compared to Booking’s 24x and Expedia’s 13x, the firm stated that “valuations seem quite full.”

The downgrade follows Airbnb’s reported adjusted net profit after minority interest (PATMI) of $1.4 billion, a 15% decline from the previous year, impacted by increased marketing and product development costs, as well as a 21% rise in operating expenses.

Despite strong demand in key markets such as Brazil and Asia-Pacific, with notable growth in bookings due to outbound travel from China, Phillip Capital is cautious about the company’s future profitability, especially as Airbnb continues to invest in its brand and expand its offerings.

For Q4 2024, Airbnb anticipates revenue growth of 9% year-over-year to $2.4 billion, with a sequential improvement in booking volumes. However, the firm expects adjusted EBITDA margins to contract by approximately 600 basis points due to higher investments, bringing the margin down to 27%.

Looking forward to 2025, Phillip Capital noted that Airbnb’s “aggressive investment strategy” in expanding market presence and product development will likely limit margin growth, making it challenging for the company to justify its current high valuation.

Phillip Capital maintains a price target of $120 on the stock, reflecting its cautious outlook on Airbnb’s valuation.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.