Sell Airbnb Stock, Analyst Says in a Reversal. It Jumped Too High After Its Debut
Dec 14, 2020
Airbnb shares are coming back to Earth after last week's remarkable debut -- and at least one analyst thinks the stock has considerably further to fall.
Airbnb (ticker: ABNB) went public last Thursday at $68 a share, and opened for trading at $146, driving the company's valuation past the $100 billion level.
Gordon Haskett analyst Robert Mollins picked up coverage of the stock last week, ahead of the offering, with a Buy rating and $77 price target. But on Monday he reversed course, cutting his rating to Underperform from Buy, while lifting his price target to $103.
Mollins wrote in a research note that Airbnb's valuation is "more than stretched" compared with online travel-agency stocks. He noted that the stock as of Friday was trading at about 2 times estimated gross bookings value for 2022, compared with 0.6 times for the average company in the online travel group, with Booking.com (BKNG) at 1.0 times and Expedia (EXPE) at 0.2 times.
On a multiple-of-sales basis, he noted that Airbnbn is at 15.5 times his 2022 estimate, compared with Booking at 6 times and Expedia at 2.1 times. He said Airbnb has grown faster than the online travel agencies and that the company deserves a premium valuation, but that he "can't get behind" a 300% to 400% valuation premium over the online travel agency stocks.
"An overwhelming majority of investors we've spoken with have been unable to justify Airbnb's valuation premium relative to [online travel agencies] and expressed interest in realizing their quick gains," he wrote in the research note. "Investors that we've spoken with like Airbnb's business model and want to be long-term holders, but are now looking at selling the stock because they no longer feel comfortable owning it."
Concludes Mollins: "We recommend selling the shares and waiting for a lower valuation entry point to become more constructive on the shares."
Airbnb shares were down 9.2% to $126.38 near midday Monday. The Dow Jones Industrial Average was up 0.2%.