Airbnb could be the next Covid-era darling to suffer from the ongoing deflation in growth-stock multiples.
At least, that’s the view of BTIG analyst Jake Fuller, who cut his rating on Airbnb (ticker: ABNB) stock on Tuesday to Neutral from Buy.
Despite the downgrade, Airbnb stock on Tuesday rose 2.8% to $162.26. The company declined to comment.
As he lays out in a research note, Fuller has become concerned that Airbnb could be the latest stock in a long line of Covid-era winners to hit the skids amid a combination of shrinking growth-company multiples, and the impact of a reopening economy.
Fuller writes that he has concerns that current Street revenue estimates are too high—and he worries that the company’s relatively lofty valuation could contract if estimates ratchet lower. “With growth slowing and numbers likely to come down, we worry about the potential for multiple compression,” he writes. “We saw exactly that for the Covid winners last year when they hit the comp wall and growth slowed.”
Fuller adds that his main concern is “aggressive post-Omicon expectations” on the Street—his forecast for room nights for the last nine months of the year is about 11% below consensus. For the year’s final nine months, he’s modeling a 14% increase in room nights, with the Street at 28%.
And he asserts that Airbnb’s double-digit revenue multiple—12 times his lower-than-consensus 2023 forecast—might not be sustainable when other online-travel stocks have pulled back to mid-single-digit multiples. Fuller sees 2022 revenue of $6.7 billion, well below the consensus estimate at at $7.3 billion.
Airbnb will report fourth-quarter results on Feb. 15.
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