Don’t sell your Airbnb stock, this fund manager says

Shares are off by about 50 per cent over the past half-year but investors thinking of selling their Airbnb (Airbnb Stock Quote, Charts, News, Analysts, Financials NASDAQ:ABNB) should hold off a while longer. So says portfolio manager Bruce Murray who thinks the company’s dominance in the online accommodation market is too strong to be denied. 

The song has been the same for a while now, as the current reopening of economies has been billed as a boon for the travel, airline and hospitality industries, particularly this summer where everyone and their dog have been Jonesing for some vacation time, looking to get the heck out of Dodge and just generally hitting the road for a spell.

Only, things aren’t panning out quite as expected, with airlines cancelling flights by the hundreds amid a shaky recovery, the war in Ukraine causing unrest and hardship and skyrocketing inflation and gas prices making that big family trip seem maybe a little less appealing. 

Scepticism about a post-pandemic recovery is clear in the markets, as well, where cruise line and airline stocks have yet to reach anywhere close to their pre-pandemic levels. And the same goes for Airbnb which was up around $200 per share this past November but is now wallowing around the $100 mark.

Don’t give up, though, says Murray.

“Airbnb is like Uber. There was a great excitement over them last year on the reopening trade, and everybody thought that these stocks were going to do really well when the economy reopened and people got out and about again,” said Murray, CEO of the Murray Wealth Group, who spoke on BNN Bloomberg on Tuesday.

“It’s sort of ‘Buy on mystery, sell on history’ now that the economy is reopening and it’s not as great as the dream was. And so, the stock has gone down a bit,” he said. “I think it’s a great company. I’d hold it. I think it’ll do just fine over the longer term.”

Murray added, “Airbnb has a very unique business model that nobody else can touch and it’s so far in front of everyone else. Its first mover advantage is huge. So, I’d stay with it.”

For a look at how the company is faring now two and a half years into the pandemic, Airbnb released its first quarter 2022 financials last month, which showed revenue up 70 per cent year-over-year to $1.5 billion. And while that comparison doesn’t tell the whole tale, as last year’s first quarter came during the height of COVID when vaccinations were just rolling out, the wider view is still pretty good, as that $1.5 billion was 80 per cent higher than 2019’s Q1.

The 2022 Q1 also featured a net loss of $19 million, which was a lot better than the loss of $292 million for the first quarter 2019. More notable was the fact that the 2022 Q1 was Airbnb’s first profitable quarter measured by adjusted EBITDA, which came in at $229 million with a margin of 15 per cent. 

By volume, the company said guest bookings were up 32 per cent compared to 2019’s Q1 and that’s despite the economic turmoil, geo-political issues and still-a-going-concern COVID pandemic.

“The first quarter of 2022 was another record quarter for Airbnb. Guests are continuing to travel domestically and to rural destinations, and now, guests are also returning to cities and crossing borders at or above pre-pandemic levels. Airbnb is stronger than ever before,” said CEO Brian Chesky in a press release.