Airbnb stock holds as Cowen reiterates buy rating and $175 target

On Thursday, TD Cowen maintained a positive stance on Airbnb Inc . (NASDAQ:ABNB) shares, with analyst Kevin Kopelman reiterating a Buy rating and a price target of $175.00. The company, currently trading at $126.01, demonstrates strong financial fundamentals with an impressive gross profit margin of 83% and a "GREAT" financial health score according to InvestingPro analysis. Kopelman’s remarks focused on the recent strategic move by Airbnb’s "Hotel Tonight" brand, which introduced a new offer of 10% rewards on bookings, redeemable for any future Airbnb stay within a year.

The analyst pointed out that although Hotel Tonight constitutes a small fraction of Airbnb’s Gross Booking Value (GBV), estimated at 1-2%, the new rewards initiative is indicative of Airbnb’s ambition to expand its hotel offerings. With a market capitalization of $78.29 billion and revenue growth of nearly 12% over the last twelve months, this expansion is seen as a means to more effectively compete with rivals such as Booking Holdings (NASDAQ:BKNG) and Expedia Group (NASDAQ:EXPE). Kopelman believes that the 10% rewards offer is particularly attractive to a specific group of Airbnb and Hotel Tonight customers, which could accelerate the re-engagement and growth of the Hotel Tonight service.

Despite Hotel Tonight’s relatively minor role in Airbnb’s overall business, the analyst perceives the rewards offer as a potential turning point for the brand’s growth trajectory. The expectation is that the promotion will significantly increase usage among frequent Airbnb users who have previously booked hotel stays through other platforms. This strategy could enable Airbnb to leverage Hotel Tonight as a loss leader, not only to increase its market share in the hotel sector but also to strengthen its position in the rental market by integrating customers more deeply into the Airbnb ecosystem.

Kopelman’s analysis suggests that the new rewards program could serve as a catalyst for Hotel Tonight, potentially transforming its market performance and contributing to Airbnb’s broader strategy. The analyst’s maintained Buy rating and $175.00 price target reflect confidence in Airbnb’s ability to execute this strategy and capitalize on the opportunity presented by the Hotel Tonight rewards offer. For deeper insights into Airbnb’s valuation and growth potential, InvestingPro subscribers can access 10 additional ProTips and a comprehensive Pro Research Report, offering expert analysis of what really matters for informed investment decisions.

In other recent news, Airbnb Inc. reported strong financial results for the fourth quarter of 2024, with revenue increasing by 12% year-over-year to $2.5 billion, driven by a rise in night stays. The Gross Booking Value for the quarter rose 13% to $17.6 billion, supported by a 12% increase in Nights and Experiences Booked. In a series of analyst updates, Jefferies upgraded Airbnb’s stock rating from Hold to Buy, setting a new price target of $185, citing the company’s potential to capture a larger share of the lodging market and benefit from its experiences offering. Similarly, Mizuho (NYSE:MFG) and Bernstein both maintained an Outperform rating with a $185 price target, highlighting growth potential and strategic investments. Tigress Financial Partners raised its price target to $200 while maintaining a Buy rating, emphasizing Airbnb’s strong performance amid favorable travel trends. The firm also noted Airbnb’s strategic initiatives, including significant upgrades and partnerships, as positive factors. Meanwhile, the travel sector faced challenges as several major airlines revised their profit forecasts downward, impacting broader travel and hospitality stocks, including Airbnb. These developments come as Airbnb continues to expand its global presence, concluding 2024 with over 5 million hosts and more than 8 million active listings worldwide.

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