Airbnb (ABNB 1.47%) was a big comeback story in 2021, fully recovering from pandemic declines and gaining 13% in share price for the year. It's down 14% so far in 2022, but shares are still fairly expensive, trading at 98 times forward-one-year earnings.
How will things go in 2022? Probably pretty well. And just to prove it, or at least to prove that the company is committed to getting things right, Airbnb announced last week that CEO Brian Chesky will be "living on Airbnb." Can this move the needle on unlocking more value for the company and investors?
Changing trends are fueling growth
Airbnb has been the ultimate travel industry disruptor. Its model, which features a platform connecting hosts and travelers, seems simple enough. But it's completely different than the centuries-old hotel and resort model that dominates the industry. What's more, it's what I'll call universally disruptive, which means it's able to continuously change. That's why even though its first gig was offering a mattress on the floor of an apartment, it's now moved past offering vacation rentals to providing long-term stays.
Even though travel is still limited in the backdrop of a pandemic, Airbnb is posting record revenue and nights booked. It's been able to accomplish that in part because through its platform, travelers have exposure to a huge range of residence options, including local and suburban. This model can easily integrate with many travel restrictions, and also feeds into a long-term stay vision.
Long-term stays, which Airbnb defines as stays of 28 days or longer, have been the company's fastest-growing time category for the past two quarters, accounting for 20% of nights booked in the third quarter. "Technologies like Zoom make it possible to work from home," the company said in its third-quarter letter to shareholders. "Airbnb makes it possible to work from any home."
This presents an exciting and unique opportunity for Airbnb. Now, management is grabbing on to it by putting its top executive into the position of work-from-Airbnb, enabling the company to learn about the experience by getting a first-hand glimpse.
A different kind of travel company
Global work-from-home trends can be more than a tailwind for Airbnb. They have the ability to change the trajectory of the company, which is well-positioned to benefit if it can harness the opportunity. Some statistics it cites: Countries are changing visa and tax rules to encourage workers to move there; stays of seven days or more grew to nearly half of the total in the 2021 second quarter; long-term stay nights booked for families grew 75% from summer 2019 to summer 2021.
Airbnb recognized this trend and quickly mobilized to tap into it last year. Over the summer, it chose 12 applicants from a list of over 300,000 to live for 12 months on Airbnb all over the world and learn from their experiences. This new venture takes that a step further.
This is probably both a gimmick and a great idea. Mostly, the company's willingness to do it what it takes to up its game is a positive sign, and investors can expect performance from a company that takes steps to improve. This won't in and of itself move the needle, but if the company puts out a summer upgrade, it's likely to include many points related to its experiences with longer stays. I would also expect to see features rolled out that focus on this category and make it more of a central part of its operations. These in turn can definitely move the needle on nights booked and increased revenue.
Currently, Airbnb trades for just 8% above its first-day closing price of $139. For investors who didn't take advantage of the opportunity to buy the stock at that time, here's your second chance.