Airbnb is the IBD Stock Of The Day as shares of the accommodation booking service rise ahead of the company's inclusion in the S&P 500. Airbnb stock has jumped 69% on the year.
However, on the stock market today, Airbnb stock slid 1.9% to close at 144.72.
Meanwhile, Airbnb stock has formed a cup base with a buy point of 154.95, according to IBD MarketSmith charts. In a positive sign, ABNB stock is trading above its 50-day moving average line.
Airbnb Stock Joining S&P 500
A recent catalyst for Airbnb stock is the company's pending inclusion in the S&P 500. Airbnb, as well as Blackstone, will join the index before the market open on Sept. 18 as part of a quarterly rebalance for S&P Indexes.
The S&P Dow Jones Indexes announced the addition on Sept. 1. Airbnb stock gapped up 7% the next trading day on Sept. 5.
But the company's shares had been rising in the weeks leading up to the decision, helped by increased travel demand. Shares climbed 19% in July to reach a 52-week high of 154.95 before retreating in August toward the cap base.
Is Airbnb Stock A Buy Now? What Fundamental, Technical Metrics Say
Airbnb Stock: Q2 Earnings Beat
The San Francisco-based firm allows home and building owners to turn their properties into short-term rentals. The company's initial public offering was in December 2020.
On Aug. 4, Airbnb reported adjusted earnings of 98 cents a share for the quarter ended June 30. That topped the analyst consensus estimate of 80 cents and marked a 75% year over year increase in earnings, according to FactSet.
Revenue climbed 18% year over year to $2.48 billion, slightly ahead of expectations and the company's own guidance.
The average daily rate customers pay for a stay — an important metric for investors — climbed 1% year over year to $166. Airbnb had previously projected the rate could decrease.
Gross booking value, however, was short of expectations, at $19.1 billion. Airbnb stock closed down by less than 1% the next trading day.
As part of its efforts to keep growing, Airbnb has targeted marketing campaigns and launched new tools aimed at boosting its supply of hosts. Active listings climbed 19% year over year in the second quarter to more than 7 million.
Evercore ISI analyst Mark Mahaney holds an outperform rating on Airbnb stock and a target price of 168. His rating is based on Airbnb's "premium growth and profitability outlook," he said in a client note after the earnings report.
"We also view ABNB as the most innovative asset in Online Travel, based on its consistently successful product development rollouts adapting to market trends," Mahaney said.
Analysts are projecting annual sales growth of 17% to $9.82 billion this year for Airbnb, according to FactSet.
Competition For Travel, Regulatory Risk
While a rebound in travel spending this year has helped Airbnb, it faces intense competition for travel dollars.
This year also has seen significant gains for Booking Holdings, whose brands include Booking.com, Priceline.com and Kayak. BKNG stock is up more than 50% on the year. Analysts project the company's yearly sales will rise 23% to $21 billion.
Expedia Group is up about 20% on the year. The company's holdings include Airbnb competitor Vrbo.
Plus, there are regulatory challenges for Airbnb. New York City earlier this month began enforcing rules that require registration of short-term rentals and set requirements for how they can be offered. Airbnb has called the rules a "de facto ban."
The company sued city officials to block the rule in June, noting in the lawsuit that Airbnb generated $85 million in revenue from short-term rentals in New York City in 2022. But in August, a judge dismissed the company's challenge.
Airbnb Stock: Technical Ratings
Airbnb stock has a best-possible IBD Composite Rating of 99, according to IBD Stock Checkup. The score combines five separate proprietary ratings into one easy-to-use rating.
Further, Airbnb's IBD Relative Strength Rating is 93 out of a 99. The rating measures a stock's price movement over the last 52 weeks with that of others in IBD's database.
In addition, Airbnb stock has an Accumulation/Distribution Rating of A-, which indicates institutional buying of shares.
