After a lethargic start of the year, Airbnb, Inc. (NASDAQ: ABNB) posted two solid quarters in the row, beating the estimates. In the best quarter so far, the company broke above US$2b in revenues. While analysts are scrambling to update their price targets, we’ll take a look into the current ownership structure of Airbnb.
Third-quarter 2021 results
The company reported a strong third-quarter result with improved earnings, revenues, and profit margins.
- Revenue: US$2.24b (up 67% from 3Q 2020)
- Net income: US$833.9m (up 280% from 3Q 2020)
- Profit margin: 37% (up from 16% in 3Q 2020)
The increase in margin was driven by higher revenue. Furthermore, the company expects strong Q4 2021 performance, somewhat in line with Q4 2019 levels, signaling that the COVID-19 effect is in the rear-view mirror. Q4 revenue guidance is set for US$1.39b and US$1.48b.
Keep in mind that the revenue guidance is lower than in Q3 because it is seasonally adjusted. Airbnb's primary market is in the Northern hemisphere, where people tend to travel less in winter.
Meanwhile, analysts are lifting the price targets. Needham is leading the pack with a new price target of US$210. Analyst Bernie McTernan praised the strong Q4 trends taking note of the Thanksgiving bookings surpassing the 2019 pace by a decisive margin.
Other price hikes include Bank of America (PT of US$194), RBC Capital Markets (PT of US$195), and Mizuho (PT of US$190). Interestingly enough, the price has already hit almost all those levels on the day of the earnings release.
A Look Into the Ownership
With a market capitalization of US$125b, Airbnb is rather large. We'd expect to see institutional investors on the register. Companies of this size are usually well known to retail investors, too.
We can zoom in on the different ownership groups to learn more about Airbnb.
What Does The Institutional Ownership Tell Us About Airbnb?
Institutions typically measure themselves against a benchmark when reporting to their investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing.
Airbnb already has institutions on the share registry and they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock, and they like it. But just like anyone else, they could be wrong and if they decide they are wrong at the same time, this can cause a catastrophic sell-off. This risk is higher in a company without a history of growth.
You can see Airbnb's historical earnings and revenue below, but keep in mind there's always more to the story.
The company's CEO Brian Chesky is the largest shareholder with 11% of shares outstanding. For context, the second largest shareholder holds about 9.9% of the shares outstanding, followed by ownership of 9.3% by the third-largest shareholder.
Interestingly, the third-largest shareholder, Nathan Blecharczyk, is also a Member of the Board of Directors, indicating strong insider ownership amongst the company's top shareholders.
Looking at the shareholder registry, we can see that the top 17 shareholders control 50%, meaning that no single shareholder has a majority interest in the ownership.
While studying institutional ownership data for a company makes sense, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of Airbnb
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board, and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions, too much power is concentrated within this group.
Our most recent data indicates that insiders own a reasonable proportion of Airbnb, Inc. It has a market capitalization of just US$125b, and insiders have US$27b worth of shares in their names. That's quite significant. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
With a 35% ownership, the general public has some degree of sway over Airbnb. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.
Private Equity Ownership
With ownership of 9.9%, private equity firms are able to play a role in shaping corporate strategy with a focus on value creation. Some might like this because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taken the company public.
Despite recent selling, insiders still own a huge stake in the company of over 20%. It is necessary to monitor whether this trend can persist, as it is sending a bullish signal to the market - showing that people who made the company still believe in it.
Furthermore, it is surprising to see that the general public is the largest individual shareholder group. We can speculate that they like the stock because they like the service - a positive sign.
It's always worth thinking about the different groups who own shares in a company. But to understand Airbnb better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for Airbnb you should be aware of.
But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to look at this free report showing whether analysts are predicting a brighter future.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full-year annual report figures.
What are the risks and opportunities for Airbnb?
Trading at 52.1% below our estimate of its fair value
Earnings are forecast to grow 20.1% per year
Became profitable this year
No risks detected for ABNB from our risks checks.
Simply Wall St analyst Stjepan Kalinic and Simply Wall St have no position in any of the companies mentioned. This article 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.
Stjepan is a writer and an analyst covering equity markets. As a former multi-asset analyst, he prefers to look beyond the surface and uncover ideas that might not be on retail investors' radar. You can find his research all over the internet, including Simply Wall St News, Yahoo Finance, Benzinga, Vincent, and Barron's.
Airbnb, Inc., together with its subsidiaries, operates a platform that enables hosts to offer stays and experiences to guests worldwide.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
|Analysis Area||Score (0-6)|
Read more about these checks in the individual report sections or in our analysis model.
High growth potential with excellent balance sheet.