Wall Street Initiates Airbnb Coverage

Dozens of Wall Street analysts initiated Airbnb Inc. (ABNB) coverage on Monday, following the company’s hugely-successful initial public offering (IPO) on Dec. 10. The mixed consensus marks the next step in its public journey, with lock-up expiration in April the most important date on the calendar because insiders and employees can then sell the majority of their shares, if they choose.

Just Another Travel Stock

This is a travel company despite the hype, subject to the same headwinds as Expedia Inc. (EXPE) and Trip Advisor Inc. (TRIP), who suffered through volatile 2020 price action as a result of the pandemic. While those issues have almost returned to pre-COVID levels, no one really knows how long it will take for the industry to get back on its feet. This is especially true with a highly contagious variant rounding the planet and a painfully slow vaccine rollout.

Needham analyst Brad Erickson initiated coverage with a ‘Buy’ rating on Monday, noting that Airbnb is “the category creator and clear leader in private & alternative accommodations, a market that could expand as much as 5-to-10x from its current size as it democratizes travel. In particular, we like how ABNB is expanding the category on top of usual digital marketplace channel displacement. Our U.S. channel checks indicate further share gains are yet to come”.

Wall Street and Technical Outlook

Wall Street consensus translates into a ‘Moderate Buy’ rating after the flood of analyst activity, calculated from 10 ‘Buy’ and 14 ‘Hold’ recommendations. One analyst already recommends that shareholders close positions and move to the sidelines.  New price targets range from a low of just $75 to a Street-high $200 while the stock opened the first session of 2021 just $2 below the median $153 target. This placement indicates that Airbnb is fairly-valued.

Airbnb opened for trading at 147.61 on Dec. 10 after being priced at 68 by the IPO’s underwriters. It sold off to an “all-time low” at 121.50 after a quick buying spike to 165, and entered a more sustained advance that posted an “all-time high” at 174.97 on Dec. 22. The stock has lost altitude since that time and is now trading close to the IPO price in a trading range that could persist through most or all of the first quarter.

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Disclosure: the author held no positions in aforementioned securities at the time of publication.