What happened
After blowing out earnings Tuesday evening, shares of room-rental company Airbnb (ABNB 1.84%) went on an absolute tear. At last report, the stock is up nearly 32% from last week's closing price, including a 4.7% gain through 12:12 p.m. ET today.
And Wall Street thinks there may be more in store for investors.
NASDAQ: ABNB
Key Data Points
So what
Wall Street analysts at Loop Capital, DA Davidson, and HSBC all boarded the Airbnb train this morning, raising their price targets on the stock to $145, $145 again, and $163 a share, respectively, according to a compilation from ratings watcher The Fly.
And no wonder: Despite only edging out sales predictions last quarter, Airbnb nearly doubled analyst forecasts for its Q4 earnings, reporting a per-share profit of $0.48 -- and reported 21% growth in free cash flow to boot. Q1 revenues look to be a bit lighter, with management forecasting $1.75 billion to $1.82 billion -- but that entire range of numbers is above the sub-$1.7 billion sales that analysts were looking for in Q1.
Now what
Granted, there's a question whether Airbnb can hit the targets it's set for itself -- but Wall Street likes its chances. Travel demand looks strong, says Davidson, and international demand in particular is improving, observes HSBC. All three of these analysts insist that Airbnb stock is a "buy."
But is it really? Two of the three have $145 price targets on Airbnb after all -- and after today's modest run-up, the shares are already trading close to that target at $143 and change. That doesn't sound like it leaves much upside for investors, and even Loop Capital admits that the stock seems to be "approaching full valuation." Indeed, at a market capitalization of $90.5 billion, and with trailing free cash flow of only $3.4 billion, Airbnb stock now trades for more than 26.5 times trailing FCF.
That valuation seems a bit rich, given that most analysts only see Airbnb growing earnings at less than 19% over the next five years. Happy as I am (as a stockholder) to be enjoying the gains Airbnb has racked up over the past week, I have to admit: I'm kind of with Loop Capital on this one. At the very least, Airbnb looks fully valued.
And it may even be overpriced.
