Airbnb has been treading water for the past six months, recording a small return of 3.1% while holding steady at $135.55.
Is now the time to buy ABNB? Or does the price properly account for its business quality and fundamentals? Find out in our full research report, it’s free.
Why Are We Positive On Airbnb?
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ: ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
1. Nights and Experiences Booked Drive Additional Growth Opportunities
As an online travel company, Airbnb generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.
Over the last two years, Airbnb’s nights and experiences booked, a key performance metric for the company, increased by 10.4% annually to 143.1 million in the latest quarter. This growth rate is solid for a consumer internet business and indicates people are excited about its offerings. 
2. Outstanding Long-Term EPS Growth
We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Airbnb’s EPS grew at an astounding 49.4% compounded annual growth rate over the last three years, higher than its 19.3% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Airbnb has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the consumer internet sector, averaging an eye-popping 39.7% over the last two years.
Final Judgment
These are just a few reasons Airbnb is a rock-solid business worth owning, but at $135.55 per share (or 20.1× forward EV/EBITDA), is now the right time to buy the stock? See for yourself in our in-depth research report, it’s free.
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