Airbnb IPO — Wall Street Analysts Concerned About Stock Valuation

By Avi Ben Ezra Tuesday, January 5, 2021

Airbnb stock made its much-awaited public trading debut on December 10. The company set an initial share price at $68.00 for its initial public offering (IPO). However, a surge in interest pushed the opening price to $146.00, making the IPO a huge success.

Business Valuation “Near” Full

Yesterday, numerous Wall Street firms started their coverage of Airbnb stock, around 4 weeks after the company made its public debut. The coverage was mostly dominated by a “Neutral” rating, with some analysts picking the more bullish side.

Brad Erickson, a research analyst at Needham, belongs to the group of analysts that are more positive on the Airbnb stock.

“The company is the category creator and clear leader in private & alternative accommodations, a market that could expand as much as 5-10x from its current size as it democratizes travel. In particular, we like how ABNB is expanding the category on top of usual digital marketplace channel displacement.

“Additionally, our U.S. channel checks indicate further share gains are yet to come. Finally, we are bullish on the setup for pent-up travel demand in 2021 that points to potential meaningful upside to numbers,” the analyst wrote in a note.

One of the key reasons behind his bullish call on Airbnb is the fact that the platform relies less on Google for its traffic, given that Airbnb is an established company in the private and alternative accommodations category. According to Erickson, Airbnb generated more than 90% of the traffic either directly or through unpaid channels.

Elsewhere, analysts are arguing that the uncertainty connected to the pandemic, as well as high stock valuation, are making it difficult to recommend buying the stock.

“Periods of economic weakness or uncertainty could impact global travel, reducing demand for the company’s products and services,” Canaccord Genuity analysts Maria Ripps and Michael Graham wrote in the note.

At the time of writing, Airbnb stock price trades just below the $140.00 mark, which is about 5% lower compared to the IPO opening price of $146.00.

Summary

Wall Street analysts initiated the coverage of Airbnb stock yesterday with the majority staying on the sidelines. Although they praise the company’s business model, they believe the current valuation is too high after the stock more than doubled in its public debut last month.

About the Author


Headshot for author Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

Related Articles