Airbnb (NASDAQ:ABNB) Suffers at Gordon Haskett, But Don't Count it Out

As far as initial public offerings (IPOs) go, Airbnb (NASDAQ:ABNB) just had a winner. When it rolled out on Thursday, the company saw a 113% rally in its share price at one point, and afterward, the company walked away with a market cap that just cleared the $85 billion mark. Yet even as the company won one victory, it quickly discovered that wins can be temporary, as Gordon Haskett Research Advisors weighed in with a two-level downgrade.

Next Stop: The Bargain Basement

Gordon Haskett's report took Airbnb down from a “buy” to an “underperform” in one shot. The analyst noted that Airbnb's current valuation was likely far too high—not surprising given the gains the company saw on the IPO—but there was a second problem stepping in to hurt Airbnb. Gordon Haskett noted that it had conferred with several Airbnb investors and discovered the “overwhelming majority” were not planning to stick around for the long term. Most were looking for a quick bump up followed by a brisk sell-off, and hoped to realize short-term, rather than long-term, gains.

Gordon Haskett's move here wasn't universally echoed, but did seem to have some support. For instance, Miller Tabak's analyst, Matt Maley, pointed out that moving into Airbnb right away may not have been the best option. There was certainly some “euphoria” involved, Maley noted, but if 2021 starts looking less like 2020 and more like 2019, there could be some real opportunity ahead for buying in.

Meanwhile, Chantico Global CEO Gina Sanchez believes that Gordon Haskett and Miller Tabak are both off-base, and Airbnb's valuation is more than supportable right now. After all, Sanchez noted, Airbnb has managed to achieve volume that Expedia (NASDAQ:EXPE) has yet to achieve despite being around much longer. There's something to be said for “network benefits,” Sanchez noted, and that makes Airbnb well worth its current share price.

A Broader View, Of Sorts

Our latest research, meanwhile, is still fairly limited, not surprising given that the stock only recently emerged. Right now, we have the company at one “sell” rating, one “hold” and two “buy,” which adds up to a consensus “hold” that could easily tip toward “buy” with word from a couple more analysts.

Meanwhile, the price target is hopelessly pessimistic, with the current consensus running at $95.67. Given that the current price as of this writing is $126.73, that suggests either quite a ways to fall or a need for some serious editing. With several major analysts not currently on the board yet as analysis goes, however, there's clearly a lot of room for big swings to take place. The direction of the swings, however, is somewhat unclear.

A Very, Very Pent-Up Market

The good news about Airbnb, and a point very much in favor of picking some shares up at some point, is that it's one of the leaders in a market that's got plenty of pent-up demand behind it. After nearly a year of being mostly locked-up, with a slight interlude in summer giving us at least some measure of freedom back, the idea of being able to travel somewhere some distance from home is likely appealing to a lot of potential customers out there. Even before the IPO, we'd already seen signs that people were moving away from hotels for a place to stay and more toward Airbnb. That's not so outlandish; the notion that you could get access to an entire house for roughly the same price as the cookie-cutter shoeboxes most hotels offered represented a significant value over the competition. Leave aside the aesthetic differences—which could actually be seen on Airbnb as opposed to the shockingly-similar hotel rooms seen at hotels the world over—and Airbnb represents an impressive value-added proposition in the travel market.

Here's the problem for Airbnb, though: it depends wholly on travel. It cannot pivot into other options readily; people must be going somewhere, and must expect to stay in that place at least overnight for Airbnb to have any utility at all. With lockdowns starting to come back—stronger in some places than others—the notion of anyone doing much traveling for a while is out of the picture, and so too is Airbnb's primary market.

Investing right now may be a bit too much like buying in at the top. But like Miller Tabak suggested, holding out for a little while to let the dust—and the price—settle a bit could give investors an excellent buy-in point on a future recovery. Thanks to an active vaccine picture, and therapeutic options kicking in, we may well see that future recovery come into play. That will make Airbnb a much more attractive option than it is right now.