Airbnb has reached a 52-week low amid concerns about summer travel. Is it time to buy?
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With travel stocks under ongoing pressure, Airbnbâs (NASDAQ:ABNB) shares have set a series of 52-week lows lately. Investors have punished the stock amid worries that macroeconomic factors will tank the summer rental business, even as the company has reported strong demand for its services.
Given that the stock has fallen almost 60% from its highs, is now the time to buy?
Will Travel Demand Remain Strong?
In its Q1 report released on May 3, Airbnb (ABNB) beat estimates, with revenue that jumped 70% year-over-year to $1.5B. The company also said it was expecting Q2 revenue of $2.03B to $2.13B, topping the consensus estimate of $1.97B. The online property rental platform also stated that demand will likely remain steady into the fall.
âHeading into peak travel season in Q3 2022, we are seeing substantial demand for summer travel months in EMEA and North America,â Airbnb said in its Q1 shareholder letter. âWe are also seeing higher than historical demand for Q4, which indicates that consumer confidence to travel remains strong beyond the summer months.â
But despite the sunny outlook, investors have become increasingly worried that rising inflation, escalating fuel prices and heightened concern over a possible recession will end up chilling demand for travel services this summer and possibly the rest of the year.
Airbnbâs stock has reflected the uncertainty. The stock jumped 9% to close at $156.18 on May 4 in the wake of its positive Q1 report. However, shares have drifted south since. During Thursday's action, the stock reached yet another 52-week low of $86.71. Thatâs a 59% decline from the 52-week high of $212.58 it hit on Nov. 17 of last year.
Airbnbâs competitors in the travel rental business have also felt the heat. While Airbnbâs stock has fallen 18% over the past 30 days, shares of Booking.com (BKNG) have dropped 17% and those of Expedia (EXPE) and TripAdvisor (TRIP) have tumbled 24%. In comparison, the S&P 500 has slid 7%, as of June 28.
Is ABNB a Buy?
BTIG analysts said in a note on June 24 that site traffic for Airbnb, Booking.com and Expedia had noticeably slipped from May to June, indicating that macroeconomic factors were beginning to take a toll on the recently rebounded travel business.
 âMore than anything, we view the change in trend as a potential early warning sign that travel isn't immune from the mounting macro pressure,â BTIG analysts wrote in their note.
They added that while they still expected a strong summer showing due to previous bookings, the sector could see a noticeable drop for Q3.
Truist Securities analysts, who rated Airbnb a Hold, said in a note on June 3 that while they believe travel demand remains âon track for a strong recovery in the near term,â they expect âtailwinds from pent-up demand to abateâ in 2023.
In a note dated June 21, JMP analysts said that while they viewed Airbnb as a dominant player in its category, they also believed âthe current valuation reflects market positionâ and that the shares were âfairly valued.â They added that they saw âlimited upside over the next twelve monthsâ and rated the stock Market Perform.
Wall Street analysts, on average, rate Airbnb a buy. Of the 39 analysts tracked by Seeking Alpha, 13 rated the stock a Strong Buy, with two others issuing a Buy opinion. However, the largest chunk of analysts expect a more lackluster performance, 21 experts giving the stock a Hold. At the same time, three have labeled the stock as a Sell or Strong Sell. SA authors, on average, also rate the stock a hold.
Looking at quantitative measures, Seeking Alpha's Quant Ratings view the stock as a Hold. While ABNB earned an A+ for profitability and revisions, it also received a C- for growth, a D+ momentum, and an F for valuation, as of June 29.
For an in-depth look at Airbnb, check out SA contributor Action Biasedâs âAirbnb Fundamentals Still Good, But the Risk Has Been Repricedâ or SA contributor Juxtaposed Ideasâ âAirbnb: Monster Quarters in Q2 and Q3 2022, Buy Now on Weaknessâ.