Airbnb (ABNB 0.53%) stock is up sharply so far in 2023 but down significantly from its pandemic highs. That volatility reflects conflicting views on Wall Street about the company's short-term and long-term growth prospects.

On the one hand, Airbnb appears poised to generate strong earnings as it expands its rental platform. Bears will say that investors are being far too optimistic about growth rates, which might hit a wall as economic growth slows in key markets like the U.S. and Europe.

Let's take a closer look at the cases for and against Airbnb stock.

The bearish case

The bearish case, as usual for most stocks, is straightforward and easy to grasp. Start with the fact that Airbnb is priced for a level of sales growth that's just not realistic. The company would require many years of growth that approaches fiscal 2022's 40% increase to earn its stock premium.

Shares are trading for 9 times annual revenue, after all, putting Airbnb in a rare category. Microsoft stock trades for about the same valuation despite its much larger sales footprint, proven business model, and industry-leading profitability.

Then there's the risk that Airbnb is exposed to a cyclical downturn in the travel industry. This consumer discretionary niche is highly sensitive to economic growth rates, and Airbnb hasn't yet proven that it can outperform peers like hotels and travel booking sites, whose stocks are valued more cheaply today.

The bull case

Bulls don't need to rely just on Airbnb's potential, though. The company already boasts impressive financial strength, especially considering it just closed its first profitable year. Net income was $1.9 billion, or 23% of sales in 2022. That result stacks up well against Booking Holdings and many established tech peers, including Apple.

ABNB Operating Margin (TTM) Chart.

ABNB Operating Margin (TTM) data by YCharts.

There's a good chance the company can push that figure higher over time as it makes home and room rentals more common. Executives are planning to unlock new supply in the apartment segment, for example, even as they add to the portfolio of services that Airbnb offers to hosts. "We have some big ideas for where to take Airbnb next," management told investors in mid-February.

Should you buy the stock?

Where you land on the bullish versus bearish spectrum will likely depend on your appetite for risk. Airbnb seems highly risky over the short term, given its elevated valuation and the potential for a recession in the travel industry.

On the other hand, the stock's growth potential, combined with its current strong financial position, gives Airbnb a good chance to generate solid returns for investors who aren't averse to some risk. As the platform expands to cover more listings and more services for hosts, Airbnb's sales can move significantly above the $8.4 billion that the company booked in 2022. Earnings growth might be even more impressive as profitability expands.

There will likely be periods of weaker gains in both areas, but Airbnb stock could trounce the market over the long term if it continues adding value to its platform for both guests and hosts.