At US$137, Is It Time To Put Airbnb, Inc. (NASDAQ:ABNB) On Your Watch List?

Today we're going to take a look at the well-established Airbnb, Inc. (NASDAQ:ABNB). The company's stock led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s take a look at Airbnb’s outlook and value based on the most recent financial data to see if the opportunity still exists.

Check out our latest analysis for Airbnb

What Is Airbnb Worth?

Airbnb appears to be expensive according to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. We’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 46.73x is currently well-above the industry average of 25.09x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since Airbnb’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Airbnb look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to more than double over the next couple of years, the future seems bright for Airbnb. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in ABNB’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe ABNB should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ABNB for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for ABNB, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Airbnb as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 1 warning sign for Airbnb you should be aware of.

If you are no longer interested in Airbnb, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.