Airbnb Stock Trades Higher Than Industry at 6.54X P/S: Hold or Fold?

Airbnb (ABNB Quick QuoteABNB – Free Report) shares are overvalued, as suggested by a Value Score of D. ABNB stock is trading at a significant premium with a forward 12-month Price/Sales (P/S) of 6.54X compared with the Zacks Leisure and Recreation Services industry’s 2.11X. 

ABNB is trading at a premium compared with traveling service providers like Booking Holdings (BKNG Quick QuoteBKNG – Free Report) , Expedia (EXPE Quick QuoteEXPE – Free Report) and TripAdvisor (TRIP Quick QuoteTRIP – Free Report) . BKNG, EXPE and TRIP shares are currently trading at P/S of 6.1X, 1.55X and 1.1X, respectively.

Price/Sales Ratio (F12M)

 

Image Source: Zacks Investment Research

 

ABNB’s stretched valuation is a deterrent for investors. Shares have declined 1.2% year to date, outperforming the industry’s drop of 6.2% but lagging the Zacks Consumer Discretionary sector’s fall of 1%.

 

ABNB Stock’s Performance

 

Image Source: Zacks Investment Research

 

However, Airbnb is seeing growth in Nights & Experiences Booked, which hit 111 million in fourth-quarter 2024, up 12% year over year. Solid performances across all regions, especially in Asia Pacific and Latin America, drove Nights & Experiences Booked, a trend expected to continue in the near term.

So, how should investors approach ABNB? Let’s dig deep to find out.

Frequent Feature Update Aids Airbnb’s Prospects

ABNB has introduced 535 plus new features and upgrades to enhance the platform for both hosts and guests. The 2024 Winter Release included more than 50 upgrades aimed at improving guest experiences. These updates offered personalized features such as recommended destinations, suggested search filters and personalized listing highlights, making the app more tailored to individual preferences.

Airbnb is focusing on expanding its presence in markets outside of its core regions, targeting areas that remain under-penetrated. In the fourth quarter of 2024, the average growth rate of gross nights booked on an origin basis in these expansion markets was more than twice the rate of its core markets, indicating that the strategy is effective and driving strong demand in newer regions.

The launch of Co-Host Network, a program that helps local hosts to manage their Airbnb’s, has been a growth driver. ABNB launched a Co-Host Network in 10 countries and is expanding it to Japan and Korea in the coming months. In the four months since launching, Co-Host Network has grown to support almost 100,000 listings, which earn roughly twice as much as Airbnb listings in comparable countries. 

Features like enhanced search functionality, better merchandising, flexible payment options, and the launch of local payment methods in roughly 12 countries, including Brazil, Korea and Indonesia are noteworthy developments. Airbnb is set to offer new offerings as part of its May 2025 summer release.

ABNB Offers Positive 2025 Guidance

For 2025, Airbnb expects to deliver an adjusted EBITDA margin of at least 34.5%, including investments worth $200 to $250 million on new businesses set to be introduced later this year. These new businesses are expected to contribute significantly to revenue growth over the long haul.

The Zacks Consensus Estimate for ABNB’s 2025 revenues is pegged at $12.20 billion, indicating growth of 9.93% over 2024. The consensus mark for ABNB’s 2025 earnings is currently pegged at $4.30 per share, down a couple of cents over the past seven days, indicating year-over-year growth of 4.62%.

For the first quarter of 2025, Airbnb expects revenues between $2.23 billion and $2.27 billion, indicating 4-6% year-over-year growth or 7-9% excluding forex impact. The company expects year-over-year growth of Nights and Experiences Booked in the current quarter to be relatively stable compared with the year-ago quarter.

The Zacks Consensus Estimate for ABNB’s first-quarter 2025 revenues is pegged at $2.26 billion, indicating year-over-year growth of 5.49%. The consensus mark for ABNB’s first-quarter 2025 earnings is currently pegged at 25 cents per share, down by a penny over the past seven days, indicating a year-over-year decline of 39.02%.

ABNB beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters, missing in the remaining ones, the average surprise being 23.94%. 
 

 

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

How Should You Approach ABNB Stock?

ABNB stock is currently trading below the 50-day and 200-day moving averages, indicating a bearish trend.

ABNB Stock Trades Below the 50-Day and 200-Day SMAs

 

Image Source: Zacks Investment Research

 

Airbnb operates in a highly competitive online travel market, with competitors such as Booking Holdings, Expedia, Trip.com, MakeMyTrip and other regional agencies. The company also faces stiff competition from online platforms and Google as well as hotel chains, including Marriott, Hilton, Accor, Wyndham, as well as boutique hotel chains and independent hotels. 

A challenging macroeconomic environment and the ongoing tariff war between the United States and a host of countries, including Canada and Mexico, is a headwind for ABNB’s prospects, at least in the near term. Investments in new features are expected to hurt profitability in the near term, along with a stretched valuation is a concern.

However, the continuous improvements in Nights and Experiences Booked are helping to drive ABNB’s Gross Booking Value. Growing gross nights booked, owing to solid momentum across high-density urban areas and first-time bookers, has been a tailwind for Airbnb. Strong momentum in active listings, owing to supply growth across all regions, particularly in Asia Pacific and Latin America, is expected to benefit Airbnb’s top line.

ABNB currently carries a Zacks Rank #3 (Hold), suggesting that it may be wise for investors to wait for a favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.