Buy Airbnb Stock LINK
Wall Street has become more optimistic about Airbnb (ABNB 1.88%) in recent weeks. While the stock is in negative territory over the past full year, shares jumped over 30% in the month of January.
buy airbnb stock
Airbnb shares were pushed lower in 2022, along with the rest of the market. The growth stock was lumped in with other tech peers as a prime candidate for slowing growth during a potential recession ahead.
Airbnb stands out from many growth stocks in another important area: profitability. The company's Q3 was its highest earning period to date, as net income jumped 61% to $1.2 billion. Airbnb is also generating ample cash, with free cash flow landing just under $1 billion last quarter.
Airbnb stock has intrigued investors in top growth stocks since its debut in December 2020. From an initial public offering price of $68 per share, ABNB soared 223%. The Nasdaq-listed large cap hit an all-time high of 219.94 on Feb. 11, 2021.
In recent weeks, Airbnb stock has made a normal-looking pullback. Shares may be finding eager buyers near a key technical level, the 10-week moving average. Clearly, the innovator in travel accommodations is in base-building mode and trying to bottom out.
This story analyzes all facets of the company in terms of fundamentals, technicals and mutual fund ownership. All of these elements get inputted into CAN SLIM, IBD's research-driven seven-point paradigm for successful growth stock investing.
Airbnb shares slumped almost 49% in 2022, much worse than a 33.1% decline by the Nasdaq composite. But 2023 is a different story so far. ABNB has not only vaulted as much as 69% since Jan. 1. ABNB stock appears to be leading its 50-day moving average higher, a good sign.
You generally want to home in on companies that show an RS Rating of 85 or higher. Why? That way you're selecting stocks already showing strength ahead of a potential breakout to new highs and a profitable price run. An 85 Rating means a stock is already ranking in the top 15% in terms of stock price strength. When it comes to picking high-flying growth stocks, those with superior price strength tend to make new highs, then keep going higher.
All in all, these individual ratings help explain why ABNB receives a vastly improved Composite Rating of 98 on a scale of 1 to 99. Typically, the best growth stocks wield a Composite score of 90 or higher at the beginning of their sharp price runs.
Management owns 2% of Airbnb stock. The float, now at 396.7 million shares according to MarketSmith, has risen sharply. The float makes up almost 60% of the 648.7 million shares outstanding. So, individual investors should prepare for secondary offerings of closely held shares that could hit the stock in the future.
From September to October 2021, a handle formed on ABNB's deep cup pattern. This offered a proper entry point at 177.06. A handle simply denotes a relatively quiet pullback after a stock falls sharply in price, then rebounds close to all-time highs. This last shakeout of disgruntled or uncommitted holders clears the decks for a first-class breakout.
This means the right time to buy shares was near 194, when Airbnb stock rallied sharply in that session's first five minutes of trading, then kept going past the high of the first 5-minute intraday trading bar. Please read more about the technique of buying a breakaway gap in this Investor's Corner. Buying breakaway gaps work best in a strong bull market, especially coming out of a deep or long correction.
But the threat of Covid-19's omicron variant shook the world, and the stock dove sharply below the 177.06 and 194 buy points. The negative reversal forced new buyers to sell shares to keep losses small.
Given the gap-up at the market open on Feb. 15, an investor couldn't purchase shares near the 121.50 handle buy point. So, was there an alternate buy point amid this surprise rally? Yes. Based on IBD research, powerful breakaway gaps following positive news suggest that the rally can only get stronger. Thus, looking at the early trading in Airbnb stock via an intraday chart, the first 5 minutes of trading showed ABNB hitting a high of 135. Once it surpasses this first 5-minute bar's high, the stock can be bought.
Amid a general decline in the major indexes, the alternate buy point did not turn out favorably. Indeed, alternate entries do not guarantee success, especially when market conditions get choppy. So, keep a close eye on changes in the IBD outlook on stocks. Remember, breakouts have the best chance of working when the outlook notes a confirmed uptrend.
Airbnb stock has now fallen back below the principal buy point of 121.50. If ABNB jumps sharply above this entry and volume heightens, it would be eligible for a new buy. Such positive price-and-volume action would indicate that fund managers are eagerly accumulating shares.
But the overall action in 2023 remains positive. Why? As the cup's right side formed, ABNB notched several sharp weekly advances in heavy, above-average turnover. For instance, ABNB stock rallied 13% in higher turnover during the week ended Jan. 13. More weekly gains ensued in heavy or accelerating turnover.
At some point, Airbnb may also stage a strong breakout to 52-week highs. When that happens, always stay disciplined with position management; cut losses short if the stock breaks expectations. William O'Neil, founder of Investor's Business Daily, discovered during decades of research that the biggest stock market winners rarely fall more than 7% to 8% below a proper buy point.
As a business, Airbnb (ABNB 1.88%) has had a stellar year, making a full recovery from the pandemic and then some. In the third quarter, revenue was up 29% to $2.9 billion, and net income jumped 46% to $1.2 billion. Despite those results, the stock has been moving in the opposite direction this year, down 44% year to date, as the chart below shows.
Airbnb, which unlike many growth stocks, reports earnings on a generally accepted accounting principles (GAAP) basis, has seen its valuation steadily shrink this year as earnings per share have soared, and the price has come down. The stock now trades at a price-to-earnings ratio of just under 40, around double that of the S&P 500.
In both 2021 and 2022, analysts significantly underestimated Airbnb's revenue growth, hiking their estimates over the course of each year as the company delivered strong results. What's also notable is that even as Airbnb exceeded estimates, the stock price fell sharply over the last two years, a reflection of the shift in market sentiment rather than the company's actual performance.
Based on its valuation, growth rate, and profitability, there's a lot to like about Airbnb stock right now. Wall Street has underestimated its growth rate in the past and seems likely to do it again next year.
Airbnb stock last closed at $116.61, down 1.1% from the previous day, and has decreased 30.44% in one year. It has overperformed other stocks in the Internet Content & Information industry by 0.05 percentage points. Airbnb stock is currently +42.36% from its 52-week low of $81.91, and -34.89% from its 52-week high of $179.09.
It has been a rough 2022 for many stocks, and Airbnb (ABNB 1.88%) is no exception. The stock is down 44% year to date and 48% off its early-2022 high. Taking a step back, the news isn't much better. Since its initial public offering, Airbnb is down 33%, while the S&P 500 has risen 2%.
Sounds like the stock isn't doing so great doesn't it? I disagree: The recent stock slump has provided a compelling opportunity to buy shares of a company with strong business results and a bright future.
Perhaps the most compelling reason to to consider buying Airbnb stock right now is its valuation. Over the course of its life as a public company, Airbnb's price-to-sales ratio (P/S) has been as high as 36. Currently, the stock is trading for a P/S of 8.5, only slightly above its all-time low of 7.9. On a forward sales basis, the P/S multiple is even cheaper, at 7.4.
Few companies have rocketed out of the gate more powerfully than Airbnb (ABNB 1.88%) in 2023 -- the stock is up about 45% year to date. However, that quick jump might make investors think Airbnb has risen too fast.
That's a strong earnings forecast, and if Airbnb can hit these projections, investors shouldn't worry about the stock's most recent run-up. Valuation matters when you purchase a stock, but how much it matters decreases over time because business results power long-term performance.
You may wish to track how its price changes over time in comparison to major benchmarks, like the Nasdaq 100 or S&P 500, as well as stocks in similar industries. You should also keep up with how its financial situation changes or evolves over time by following its public filings and industry reports, just as you did before you bought into ABNB.
If you love to travel or have made money hosting on Airbnb, investing in the company may seem like a no-brainer. But keep in mind that investing in individual stocks can be incredibly risky and expensive, even for experienced traders.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks' proprietary data indicates that Airbnb, Inc. is currently rated as a Zacks Rank 2 and we are expecting an above average return from the ABNB shares relative to the market in the next few months. In addition, Airbnb, Inc. has a VGM Score of B (this is a weighted average of the individual Style Scores which allow you to focus on the stocks that best fit your personal trading style). Valuation metrics show that Airbnb, Inc. may be fairly valued. Its Value Score of C indicates it would be a neutral pick for value investors. The financial health and growth prospects of ABNB, demonstrate its potential to perform inline with the market. It currently has a Growth Score of B. Recent price changes and earnings estimate revisions indicate this stock lacks momentum and would be a lackluster choice for momentum investors. 041b061a72