Despite customers feeling the pinch of inflation in the second quarter, Airbnb stock (NASDAQ:ABNB) had an outstanding performance. Airbnb set multiple records in the second quarter, including booking 103 million nights and experiences, $2.1 billion in sales, and $379 million in net profitability.
These figures show incredible year-over-year (YOY) and year-over-three-year (YO3Y) increase compared to pre-pandemic travel.
To cap off a fantastic second quarter, all investors could have hoped for was guidance for the third quarter. Management anticipates the biggest quarterly revenue, with gross booking value increasing at a pace comparable to Q2. While they did not provide a net income forecast, they did say that the adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin would be about 49%, which is the highest it has ever been.
It’s difficult to disagree with such counsel, yet the economy hasn’t improved since Airbnb issued it on August 2. However, experts predict that Airbnb’s revenue will be $2.84 billion, roughly at the midpoint of the company’s projections.
Airbnb Stock is trading at a reasonable price.
Airbnb stock (NASDAQ:ABNB) is still down roughly 50% from its all-time high, indicating that investors do not share management’s optimism. However, a large portion of this reduction is due to Airbnb’s value plummeting from absurdly high levels. Airbnb stock (NASDAQ:ABNB) used to trade at more than 20 times sales, which is unsustainable unless you’re rapidly expanding with a must-have, non-discretionary product.
The current multiple of 10 times revenue is more realistic, and 25 times free cash flow is also appropriate for a firm expanding at the rate of Airbnb.
However, investors will remain skeptical unless Airbnb can demonstrate its worth during a recession (not one caused by COVID-19, when little travel happened). The present slump, and maybe a future recession, would enable Airbnb to demonstrate its durability.
Nonetheless, there is a pessimistic case to be made against Airbnb Stock
The most serious concern is the impact of short-term rentals on housing and rental supply. Dedicating a property for Airbnb rental removes one from the market that would normally house a long-term tenant. Rents are increasing throughout the country, leaving fewer locations to search, which has enraged many tenants and communities.
Cities may limit the number of short-term rentals or tax them so that staying in one makes more sense than staying in a typical hotel. However, if this happens in one of Airbnb’s key tourism locations, I foresee a protracted legal struggle, which means the impact of anything like this won’t be noticed for some time.
Airbnb Stock: This modification may not happen at all.
Nonetheless, it’s essential to consider before investing in Airbnb stock (NASDAQ:ABNB). Despite the consumer having less discretionary spending, the firm has long-term tailwinds in its favor and is still predicting its greatest quarter ever in Q3.
I believe that now is a good time to start investing in Airbnb stock (NASDAQ:ABNB) since the company has far more upside potential in the long run than the 25% that experts predict.
Featured Image – Megapixl © Mohammedsoliman4
Author Okoro Chinedu 
