Airbnb (ABNB 2.53%) was crushed at the pandemic's onset. The worldwide travel facilitator watched as revenue declined in response to the spread of the potentially deadly virus. Not only were fewer people willing to travel during the tumultuous time, but fewer people were interested in making their homes available.
Thankfully, the world is making progress combatting COVID-19, and people are leaving their homes and taking those vacations they were putting off earlier on in the outbreak. As a result, Airbnb stock is catching fire with investors and is up 7% in the last five days of trading. That has some market participants asking if it's too late to buy Airbnb stock. Let's address that concern below.
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Airbnb is stronger than ever
The rising appetite for consumer travel is showing up in Airbnb's results. In its fourth-quarter ended Dec. 31, revenue rose to $1.5 billion. That was up 78% from the same quarter last year, but perhaps more tellingly, it was up 38% from the same quarter in 2019, before the pandemic.
Airbnb brings hosts and travelers together through its app and platform and takes a percentage of each reservation. Gross booking value, which measures the total value of said reservations, rose to $46.9 billion in 2021, up 23% from 2019. By nearly all measures, Airbnb's business has emerged from the worst of the pandemic stronger than ever.
That can be further evidenced when considering that Airbnb has turned the corner on profitability. For two quarters in a row, Airbnb delivered positive earnings, the first time in its history as a public company. Previously, Airbnb only reported positive income during the peak travel season in its quarter ending in September. Speaking of which, in this year's quarter ended in September, Airbnb's net income totaled $834 million, up from $267 million in the same quarter in 2019.
It's an excellent time to buy Airbnb stock
Despite the 7% rise in the stock price in recent days, Airbnb's stock is not expensive. The company is trading at a price-to-free cash flow multiple of 48. That's roughly the lowest investors have ever been able to purchase Airbnb's stock. Keep in mind Airbnb's prospects are excellent in the near and long term.
Over the next few quarters, Airbnb will catch the tailwind from rising consumer mobility as most governments ease travel restrictions and the threat of COVID-19 diminishes through a strengthening arsenal to combat the virus. Considering that Airbnb's stock is down 11% in the last year, the benefits from reopening do not appear to be priced into its valuation.
Longer-term, Airbnb thrives as it offers consumers an alternative to primarily one-size-fits-all accommodations offered by traditional hotels and resorts. Consumer preference for Airbnb is evidenced by the gross booking value on the platform, which was 23% higher in 2021 compared to 2019. Meanwhile, the overall hotel and resort industry has yet to recover revenue lost during the pandemic. Participants, including Airbnb, are hoping governments worldwide ease cross-border travel restrictions so that folks can move around freely. If or when this happens, the industry could slingshot above pre-pandemic levels as pent-up demand unleashes.
Considering Airbnb's excellent prospects in the short and long term, as well as its fair valuation, it's certainly not too late to buy Airbnb stock.
