Airbnb (ABNB 0.53%) is often considered an inflation-resistant growth stock for three reasons: First, budget-conscious travelers will probably choose cheaper Airbnb rentals over pricier hotels. Second, hosts will more aggressively rent out their properties to generate more passive income. Lastly, Airbnb's entire business model is self-sufficient and isn't directly exposed to the rising prices of gas, food, and other necessities.

Airbnb also seemed like an obvious way to capitalize on the return of global travel in a post-pandemic world. Those tailwinds set it apart from "pandemic-era" growth plays like e-commerce, online learning, and other stay-at-home stocks, many of which now face headwinds in a post-lockdown market.

Guests check in to an Airbnb in Africa.

Image source: Airbnb.

But despite those strengths, Airbnb's stock has still declined 20% over the past 12 months as rising interest rates drove investors away from higher-growth tech stocks. Can Airbnb rebound and rally to fresh highs over the next 12 months?

Lapping its post-pandemic recovery

Airbnb's revenue declined 30% to $3.4 billion in 2020 as more people stayed at home during the pandemic. But in 2021, its revenue soared 77% to $6 billion as the lockdown measures were relaxed. Airbnb's revenue growth has decelerated over the past year, but that was mainly because it lapped its own post-lockdown recovery.

Period

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Nights and experiences growth (YOY)

197%

29%

59%

59%

25%

GBV growth (YOY)

320%

48%

91%

67%

27%

Revenue growth (YOY)

299%

67%

78%

70%

58%

Data source: Airbnb. YOY = Year-over-year.

Airbnb expects its year-over-year comparisons to start normalizing again in the third quarter with "stable" nights and experiences growth relative to the second quarter and a "modest acceleration" in gross book value (GBV) growth.

It expects its Q3 revenue to rise 24% to 29% year over year -- and 69% to 75% on a two-year basis -- to a record high of $2.78 to $2.88 billion. That outlook seems strong, but its expectations for merely "stable" nights and experiences growth suggest that global travel trends could be peaking again.

But during Airbnb's latest conference call, CFO Dave Stephenson claimed the company could achieve accelerating growth again if it sees a "continued recovery" in Europe and Asia. Stephenson said both regions were still "significantly depressed" as the Russisa-Ukraine war rattled Europe and regional COVID-19 outbreaks throttled travel trends across Asia.

Expanding margins and stabilizing profits

Airbnb's net loss narrowed from $4.6 billion in 2020 to $352 million in 2021, while its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose from negative $251 million in 2020 to positive $1.6 billion in 2021. Its net profits and adjusted EBITDA margins have both continued to stabilize over the past year, which suggests that economies of scale are kicking in and supporting its long-term profit growth.

Period

Q2 2021

Q3 2021

Q4 2021

Q1 2022

Q2 2022

Net income (millions)

($68)

$834

$55

($19)

$379

Adjusted EBITDA (millions)

$217

$1,101

$333

$229

$711

Adjusted EBITDA margin

16%

49%

22%

15%

34%

Data source: Airbnb.

In Q3, Airbnb expects its adjusted EBITDA margin to "be at or slightly below" its all-time high of 49% a year earlier. For the full year, it still expects its adjusted EBITDA to expand year over year.

The expectations and valuations

Analysts expect Airbnb's revenue to rise 38% to $8.3 billion this year and to grow 15% to $9.5 billion in 2023. They expect its adjusted EBITDA to increase 67% to $2.7 billion this year then climb 17% to $3.1 billion in 2023. Based on those expectations, Airbnb's stock trades at about nine times this year's sales and 27 times its adjusted EBITDA.

By comparison, Booking Holdings, which is growing at a comparable rate as Airbnb, trades at five times this year's sales and 15 times its adjusted EBITDA. Expedia trades at just one times and seven times this year's sales and adjusted EBITDA, respectively.

Therefore, we can't consider Airbnb to be a bargain relative to its industry peers yet. However, if you believe in Airbnb's potential to disrupt traditional hotels and online travel agencies like Booking and Expedia over the long term, it might still be a great stock to buy and hold for several years or decades.

I firmly believe Airbnb is still a solid long-term investment. But over the next 12 months, investors should expect fairly limited gains as it laps its post-lockdown recovery and grapples with near-term challenges in Europe and Asia.