Airbnb Poised To Win From Economic Reopening: How Network Effects Drive Growth And Margin Upside

Needham analyst Bernie McTernan reiterated a Buy rating on Airbnb, Inc.ABNB, raising the target price to $160 from $150.

ABNB is gaining from solid supply trends in the U.S., and TSA passenger data +1% in June vs. '19. 

The analyst thinks the company benefits from a network effect, with guests becoming repeat bookers and hosts. 

The analyst is particularly upbeat about ABNB's positioning, as the company is ready to benefit from the reopening of the economy and pent-up demand for travel.

The analyst notes that ABNB has been taking share within the travel category, aided by the pandemic, which is driving more people to try the service.

Also Read: Airbnb's Future Revenue: Analyzing The Impact Of Shifting Consumer Preferences And Regulatory Challenges

Given the above, the analyst raised revenue estimates for 2Q from $2.406 billion to $2.423 billion.

For FY23, the analyst raised revenue estimates from $9.299 billion to $9.599 billion. Adjusted EBITDA estimate is raised from $3.233 billion to $3.329 billion. Gross bookings value is expected to grow 13.4% Y/Y.

Going ahead, the analyst sees organic bookings accelerate with a static approach to marketing investments as a potential upside, leading to meaningful margin upside.

Additionally, given the high quality and differentiated consumer experience relative to other travel marketplaces, ABNB generates significant user engagement from direct or unpaid channels. 

For FY24, the analyst raised revenue estimates from $10.370 billion to $10.733 billion. Adjusted EBITDA estimate is raised from $3.709 billion to $3.828 billion. Gross bookings value is expected to grow 11.7% Y/Y.

Price Action: ABNB shares are trading higher by 2.93% to $135.57 on the last check Tuesday.