Investing Alert: Now's the Time to Snap Up This Stock Down 43%, According to Wall Street!
In the world of investing, it's sometimes surprising to see how even major players can fall from grace—especially when they still possess immense potential for growth. Take Airbnb, for instance. Its stock price has plummeted by a staggering 43% compared to the heights it reached in early 2021. Yet, while the stock might be struggling, the company's prospects remain robust, particularly in light of its international expansion plans and advancements in artificial intelligence (AI).
The Allure of AI Investments
Investors are currently captivated by the promise of technology, especially artificial intelligence. It appears that any stock labeled as an "AI winner" is skyrocketing to unprecedented valuation levels, amassing trillions of dollars in market capitalization over the past two years. However, not all of these technology stocks share the same upward trajectory.
Let's focus on Airbnb (NASDAQ: ABNB), the online travel platform that’s navigating turbulent waters. Even with its stock slipping, Airbnb has a lot going for it and continues to evolve in ways that position it favorably for the future. Analysts on Wall Street set an average price target of $139, while the current stock price sits at around $123 (as of October 15). I firmly believe that, in the long run, this stock is on an upward ascent.
Why Airbnb is Poised for Unstoppable Growth
So, what makes Airbnb a stock worth considering for long-term investment? A significant factor lies in its opportunities for global expansion.
International Growth Potential
Those familiar with Airbnb in the U.S. or other English-speaking countries might perceive it as a well-established service. Indeed, just last quarter, Airbnb processed an impressive $23.5 billion in gross bookings, with a strong hold on the domestic travel market. However, this dominance doesn’t fully extend to non-English-speaking territories.
Currently, a large portion of Airbnb's bookings originates from its initial markets like the U.S. Although the demand for short-term rentals in North America is projected to steadily increase—with a low single-digit growth rate observed in nights booked recently—the company anticipates that most of its significant growth will materialize in foreign markets.
In countries like Italy, Brazil, and Japan, Airbnb's market presence remains minimal compared to its North American foothold, which presents an exciting opportunity for expansion. The firm has been actively tailoring its services and marketing strategies to resonate with local sentiments and expectations. For instance, in Japan, there was a noteworthy 15% surge in first-time Airbnb users just last quarter, indicating that efforts to engage new customers are paying off. Attracting new users to the platform and familiarizing them with the home-sharing model is crucial for establishing a solid international brand presence. If Airbnb can maintain this momentum in its global expansion endeavors, it stands to drive considerable growth in bookings, revenues, and overall financial performance over the next decade.
Innovation Beyond Core Services
Founded in 2007, Airbnb is nearing its 20th anniversary, yet its growth remains rooted in the original home-sharing concept. Nevertheless, founder Brian Chesky is keen on pushing the company into new avenues. Recently, Airbnb has revamped its Experiences offering—events like guided tours or cooking lessons designed for travelers—and has introduced Services, which are extra amenities such as massages or personal chefs. While these initiatives are still in their infancy, they represent a sensible way for Airbnb to diversify its offerings and cater to modern travelers' evolving needs.
Additionally, the company stands to benefit significantly from employing advanced AI technologies. This includes utilizing customer service chatbots for improved efficiency as well as experimenting with AI-driven search tools to assist customers in finding their ideal vacation rentals. In fact, Airbnb plans to integrate AI into its travel search capabilities next year, leveraging the platform's existing user base to optimize search outcomes.
While these new initiatives may take time to reflect in revenue growth, they lay the foundation for expanding Airbnb's total addressable market in the long run.
Is Now the Right Time to Buy Airbnb Stock?
Considering the current state of Airbnb’s stock, it appears to be relatively attractively priced. This stands in stark contrast to many other tech companies riding the AI wave.
Using an enterprise value-to-EBIT ratio—which factors in the company’s net cash position while excluding non-operating income—Airbnb's earnings multiple is a reasonable 25. The firm boasts an EBIT margin of 22.5%, a metric that has room for expansion thanks to upfront investments in international markets and novel product categories.
Over the last year, Airbnb has seen revenues rise by 13%, and it's anticipated that this substantial growth rate will persist for years. With the potential for further EBIT margin enhancement, and the fact that management has initiated a stock buyback program to return cash to shareholders, it's clear that Airbnb is a stock presenting a compelling case for investment now.
Should You Allocate $1,000 to Airbnb Stock?
Before making any decisions regarding buying Airbnb stock, it’s essential to weigh some considerations. Interestingly, the Motley Fool’s Stock Advisor team recently unveiled their recommendations for the ten best stocks currently available— and Airbnb was not included in that lineup. The stocks that made the cut include some that have generated remarkable returns over the years, like Netflix or Nvidia, both of which delivered astounding value to early investors.
The Stock Advisor program has boasted a total average return of 1,044%, significantly surpassing the S&P 500's 188% yield. Don't let this opportunity slip away—check out their latest list for potential investment choices.
Given the above insights, what are your thoughts on Airbnb's future? Do you believe this stock is indeed a worthy addition to your portfolio? Join the conversation in the comments below and share your opinions!
