What happened
Both the weather and the summer tourism season are heating up, but you wouldn't know that from the performance of Airbnb (ABNB 1.09%) stock on Wednesday. Shares of the bellwether home accommodation specialist tumbled by almost 4% on the back of a significant price target cut from an analyst.
So what
Doug Anmuth, from JPMorgan Chase unit J.P. Morgan, had a busy Wednesday. In addition to reevaluating a set of tech stocks under his coverage, he also took aim at several with a heavy online presence. With Airbnb, he took an ax to his price target, reducing it rather drastically to $110 per share from his previous level of $185.
Anmuth's reasoning wasn't immediately apparent. In making price target trims to other tech and tech-adjacent titles, however, the analyst said that top internet stocks are entering a more mature, lower-growth period in which they will be more subject to macroeconomic headwinds. With the global economy anticipated by many to be facing a slowdown, such companies will be hurt.
Investors might also have been concerned by Airbnb's latest move to curb parties at the properties rented through its system, thus surrendering revenue from such activity. Tuesday afternoon Airbnb announced it was permanently banning leasing for these purposes. It had originally declared a temporary ban in August 2020; this is now permanent company policy.
Now what
Numerous signs point to a banner summer season for the travel industry. Many people used to the confinement of the pandemic have managed to save cash, and are now eager to spend it by getting the heck out of their homes and into the world.
In the case of Airbnb, I think Anmuth's concerns are overblown and the price target cut a bit steep; the company should benefit handsomely from these current travel trends.
