With the company potentially at an important milestone, we thought we would take a closer look Airbnb, Inc. (NASDAQ: ABNB) future perspectives. Airbnb, Inc., along with its subsidiaries, operates a travel and experiences platform for guests around the world. The US $ 104 billion market-capitalization company recorded a loss in its last year of US $ 4.6 billion and a last year-over-year loss of US $ 4.3 billion, closing the gap between loss and breakeven point. As the path to profitability is the topic of concern to Airbnb investors, we decided to assess market sentiment. We’ve put together a quick rundown of industry analysts’ expectations for the company, its breakeven year, and its implied growth rate.
The consensus of 36 US hospitality analysts is that Airbnb is on the verge of breaking even. They expect the company to post a terminal loss in 2021, before making a profit of $ 623 million in 2022. Therefore, the company should break even in about a year or less! How fast will the company need to grow to meet the consensus forecast that anticipates equilibrium by 2022? Looking back at analysts’ estimates, it turns out that they expect the company to grow 38% on average year-on-year, indicating high analyst confidence. If this rate turns out to be too aggressive, the company could become profitable much later than analysts predict.
NasdaqGS: ABNB Growth in earnings per share January 9, 2022
We are not going to go over company specific developments for Airbnb as this is a high level summary, however, keep in mind that a high growth rate is not generally not unusual, especially when a business is in an investment period.
Before concluding, there is one problem worth mentioning. Airbnb currently has a relatively high level of debt. As a general rule of thumb, the rule of thumb is that debt shouldn’t exceed 40% of your equity, which in Airbnb’s case is 45%. Note that higher debt increases the risk of investing in the loss-making business.
This article is not meant to be a full analysis on Airbnb, so if you want to understand the business on a deeper level, take a look at Airbnb’s business page on Simply Wall St. We also have made a list of relevant factors. you should continue your research:
- Evaluation: What is Airbnb worth today? Has the potential for future growth already been factored into the price? Our free research report’s intrinsic value infographic helps to visualize whether Airbnb is currently being poorly valued by the market.
- Management team: An experienced management team at the helm reinforces our confidence in the company. Take a look at Airbnb’s board members and the CEO’s background.
- Other high performing stocks: Are there other stocks that offer better prospects with a proven track record? Check out our free list of these great stocks here.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in any of the stocks mentioned.
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