In a research note ahead of the company's quarterly earnings, Canaccord analyst Maria Ripps said she expects a continued recovery in Airbnb's (ABNB) gross bookings as the accelerating global vaccine rollout gives consumers confidence to plan trips, even if they are primarily domestic.
GROSS BOOKINGS RECOVERY: Commenting on Airbnb's upcoming earnings report, Canaccord analyst Maria Ripps said she expects a continued recovery in gross bookings during the first quarter as the accelerating global vaccine rollout gives consumers confidence to plan trips, even if they are primarily domestic. Airbnb will likely discuss how demand has trended in different markets around the world, along with its plans to expand host supply, the analyst contended.
Ripps pointed out that with 40% of U.S. adults fully vaccinated and 56% having received their first dose, the recovery of domestic travel in the U.S. is gaining momentum, and 1.62M travelers passed through TSA checkpoints on May 2, up 10 times from the 170K in 2020 and roughly two-thirds of the 2.5M travelers recorded on the same date in 2019, marking the busiest travel day in the U.S. since the pandemic began. She expects 8.5% year-over-year growth in total global nights booked as the company begins to lap the initial impact of travel cancellations during March 2020, along with growing confidence to book future travel given vaccine progress and easing restrictions, while GAAP net revenue is forecast to decline 14% year-over-year as strength from domestic travel, particularly long-term stays enabled by heightened remote work flexibility, was again offset by weakness from international travel. Ripps has a Buy rating and a price target of $220 on the shares.
'SHARE-TAKER': Two weeks ago, Needham analyst Bernie McTernan initiated coverage of Airbnb with a Buy rating and $210 price target. The analyst told investors at the time that he likes Airbnb's strategic positioning as a "share-taker in the large, online travel market." The pandemic unlocked the value of Airbnb to new customers, and the realization of lower spend necessary to acquire customers will drive EBITDA growth "well in excess" of revenue growth as bookings return, the analyst added.
OUTLOOK: During the company's last earnings call, Airbnb said its sees first quarter revenue down year-over-year. "In the near-term, we anticipate that year-over-year comparisons for Nights and Experiences Booked (net of cancellations and alterations), as well as for Gross Booking Value (net of cancellations and alterations), will be volatile and unreliable measures of the steady-state growth of our business. This is due to the significant increase in cancellations that we experienced in Q1 and Q2 of 2020. For both of these metrics, we anticipate that levels in Q1 2021 will be higher than those of Q1 2020, but lower than Q1 2019. For revenue, the year-over-year decline in Q1 2021 is expected to be less than that of Q4 2020, as we continue to see gradual improvements in guests' willingness to book stays. Year-over-year comparisons for revenue are not affected to the same degree by the increase in 2020 cancellations," the company explained.
Airbnb added that, "Due to typical seasonal patterns, our revenue is usually the lowest in Q1. We anticipate our Adjusted EBITDA margin to also be at its lowest during Q1. Additionally, we expect our Adjusted EBITDA margins to be lower in the first half of 2021 than the second half, both due to seasonality and due to investments we are making in certain areas."
PRICE ACTION: In Thursday morning trading, shares of Airbnb have dropped about 1% to $139.35.
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