Why Airbnb (ABNB) is a Hot Buy Ahead of Next Week's Earnings
Elevate Your Investing Strategy:
Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
I'm stoutly Bullish on Airbnb stock ahead of next week's earnings report, expected to hit the market after market close on Wednesday, August 6th. Ultimately, I see a stock driven by margin expansion, new verticals, and a recovering travel market that is set to unlock fresh revenue opportunities.
Airbnb's Q1 Earnings Beat Expectations
Taking a step back, on May 1, Airbnb posted solid Q1 2025 results, delivering an EPS of $0.24 versus the Street's expectation of $0.23. Revenue climbed 6% year-over-year to $2.27 billion, slightly above the $2.26 billion consensus estimate. Gross booking value rose 7% to $24.5 billion, supported by 143.1 million nights and experiences booked, up 8% from the year-ago period.
However, the company issued a more muted Q2 revenue outlook, guiding for $2.99 billion to $3.05 billion, slightly under the $3.03 billion consensus at the midpoint. Despite this, Airbnb reaffirmed its full-year adjusted EBITDA margin guidance of at least 34.5%, signaling confidence in its cost management and pricing power.
Since the May earnings release, Airbnb stock has gained 9.2%, underperforming the S&P 500's 12% rise. So far this year, Airbnb is up just 4.13% versus the index's 8.32% gain, suggesting plenty of room for a catch-up rally. The stock's most recent price action indicates fairly strong bearish sentiment, which has pushed the stock lower for the past three days in a row.
What to Watch Out for on August 6th
Airbnb market analysts have been slowly raising their forecasts leading into next week's performance figures: consensus EPS estimates have climbed from $0.88 to $0.94 since the last earnings report, reflecting growing optimism.
I believe the company's EBITDA margin guidance remains conservative and expect upside in both profitability and topline performance. Key catalysts include improving attach rates in Airbnb's Experiences and Services segments, as well as a broader rebound in global travel.
Notably, — and in both cases, the stock traded higher the following day.
Redesigned App Signals Strategic Pivot
Airbnb's newly redesigned app, launched in May this year, introduces distinct tabs for Homes, Experiences, and Services, a signal of the company's ambition to become more than just a lodging marketplace.
In a recent Bloomberg interview, CEO Brian Chesky shared that Airbnb wants to emulate Amazon in the Services sector. With two-thirds of U.S. jobs currently reliant on this particular part of the U.S. economy, this pivot dramatically expands the company's total addressable market.
According to the ambitious CEO, his goal is to build a full-scale services platform where users can book not just homes, but also experiences, local services, and more. I expect this initiative alone could eventually drive an incremental $10 billion in annual bookings.
Airbnb's Valuation is High, But Justified
Yes, Airbnb trades at a premium: its trailing 12-month P/E ratio stands at 35.8, compared to a sector median of just 19.6. But I believe this premium is justified by the company's midterm revenue growth potential and expanding margins.
Consensus projects around 9.5% midterm revenue growth, which I view as conservative given accelerating trends in its core markets and the Services vertical. My own valuation work, based on 12 models including EV/EBITDA, P/E, and 10-year DCF with an EBITDA exit, suggests a fair value of $153.90, implying over 12% upside from current levels.
What is the 12-Month Price Target for Airbnb?
According to TipRanks, Airbnb holds a Hold consensus rating, based on 28 recent analyst reviews, which includes eight Buys, 14 Holds, and six Sells. ABNB's average stock price target is $135.71, implying ~2.5% upside over the next twelve months.
That said, July saw a string of price target hikes and positive analyst actions, reflecting growing confidence ahead of earnings.
Bernstein SocGen reiterated its Outperform rating and $165 target, commenting that Airbnb is currently going it alone in Services and Experiences, sourcing both supply and demand through its own brand marketing. Bernstein noted that the company could accelerate growth by partnering with established platforms for services it doesn't yet offer—like airport transfers, car rentals, or gear rentals—and by expanding visibility, such as bidding on high-intent search terms like 'Experiences Paris.' While they expect Airbnb to stick with its current strategy for now, these tactics could drive broader adoption and usage.
In addition, Deutsche Bank maintained its $125 price target with a Hold rating, while Swiss bank UBS lifted its target to $156 from $137 with a Neutral rating.
Airbnb is Poised to Surprise
Airbnb isn't just another travel stock. It's evolving into a powerful digital services platform, with high margins, ample cash flow, and a visionary CEO charting bold new territory.
With profitability gaining strength, vertical expansion underway, and a potentially transformative strategy shift in motion, I believe Airbnb is positioned for acceleration in the coming quarters. For investors seeking growth in a dynamic, post-pandemic travel-tech landscape, Airbnb may be worth buying in advance of next week's earnings news.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
40 minutes ago
- CNBC
CNBC Daily Open: Markets appear to have gotten over the July jobs report — unlike Trump
The U.S. Bureau of Labor Statistics' July's jobs report revised previous months' figures down so dramatically that U.S. President Donald Trump on Monday called it "RIGGED" and "CONCOCTED." Markets, however, seem to have shrugged off their worries for now — U.S. stocks rebounded Monday from the sell-off on Friday after the report was released. But the move could be more of an instinctive reflex than a reflection of what's really driving markets. "Today is sort of a bounce-back day," said Sam Stovall, chief investment strategist at CFRA Research. "Stocks tend to pop after a drop, so that's what's happening." "We have to wait and see what happens tomorrow, because there could be a possibility that investors think, 'You know what, we really need to take some money off the table to digest some of these gains,'" he added. Trump's new tariffs come into force on Aug. 7, so there's a possibility investors could seize this opportunity, when markets have recovered slightly from Friday's losses, to take profit first — and before any further slowdown, as suggested by July's jobs report, is potentially "rigged" and strikes the U.S. economy. Trump will 'substantially' raise tariffs on India. The South Asian country's oil purchases from Russia is the cause behind Trump's threat. In response, India said it was being "targeted" by the U.S. and EU, and criticized them as "indulging in trade with Russia." The EU will suspend its planned U.S. tariffs for six months. The countermeasures, which would have taken effect on Aug. 7, were delayed to allow the bloc to "further negotiate" with the U.S. and "finalise a Joint Statement" on their trade deal. U.S. stocks rebound from Friday's losses. Major U.S. indexes rose Monday, with the S&P 500 snapping a four-day losing streak. Asia-Pacific markets traded higher Tuesday, though India's Nifty 50 fell as it began trading for the day. Palantir's quarterly revenue exceeds $1 billion. Wall Street had expected the software provider to hit that milestone only in the fourth quarter of the year. But a 48% year-over-year jump in second-quarter revenue helped Palantir beat forecasts. [PRO] The 'Magnificent Seven' are powering earnings growth. Year on year, Mag 7 earnings have increased by 26%. The other S&P 500 companies posted a combined 4% growth — a disparity that could be problematic for investors, according to an analyst. How an obscure SEC proposal could boost listings on European stock exchanges The Securities and Exchange Commission is in the early stages of a proposal to tighten the rules for foreign companies that trade on U.S. exchanges. It's a move that could inadvertently prompt dozens of stocks to seek a secondary listing in London or another major financial center. The plan targets the definition of a "Foreign Private Issuer." One of the key changes being floated would require FPIs to have an active listing on a "major" non-U.S. exchange to qualify for exemptions from some regulatory requirements.
Business Insider
2 hours ago
- Business Insider
Shell (SHEL) was downgraded to a Hold Rating at Freedom Capital Markets
In a report released today, Sergey Pigarev from Freedom Capital Markets downgraded Shell to a Hold, with a price target of $78.00. The company's shares closed today at $71.85. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. In addition to Freedom Capital Markets, Shell also received a Hold from HSBC's Kim Fustier in a report issued today. However, on the same day, TD Cowen maintained a Buy rating on Shell (NYSE: SHEL). The company has a one-year high of $74.18 and a one-year low of $58.55. Currently, Shell has an average volume of 4.35M.
Business Insider
2 hours ago
- Business Insider
Closing Bell Movers: Palantir hits record highs on beat and raise
In the opening hour of the evening session, U.S. equity futures are up marginally, with S&P 500, Nasdaq 100, and Dow Industrials all adding to Monday's solid market with 0.1% gains. WTI Crude Oil is little changed around $66 per barrel following three consecutive sessions of declines, while Precious Metals are opening slightly higher in electronic trade, and if gains should hold, will mark three straight sessions of advance. Elevate Your Investing Strategy: Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence. Tech and Communications Services – dominated by Google and Meta – led the S&P 500 index on Monday, followed closely by high-yielding Utilities benefiting from lower interest rates. The yield on the 10-year Treasury edged further down to 4.2% – the cusp of a three-month low. Fed funds futures markets also continued to price in the near-certain FOMC easing starting with September decision, with probabilities now rising to 94%. Afterhours, Palantir was the highlight, rising to record highs on a strong earnings beat and guidance raise. Vertex Pharma and Hims and Hers were down double-digits however, with earnings falling shy of consensus. Check out this evening's top movers from around Wall Street, compiled by The Fly. HIGHER AFTER EARNINGS – ALSO HIGHER – Arteris (AIP) up 55.1% after entering partnership with AMD (AMD) DOWN AFTER EARNINGS – Inspire Medical Systems (INSP) down 21.1% Vertex Pharmaceuticals (VRTX) down 14.5% Hims & Hers Health (HIMS) down 13.7% Kyndryl Holdings (KD) down 13.6% CRISPR Therapeutics (CRSP) down 6.0% MercadoLibre (MELI) down 5.2% Air Lease (AL) down 4.9% Diamondback Energy (FANG) down 3.7% Trex Company (TREX) down 2.8%
