Airbnb Inc (NASDAQ: ABNB) has had a great start to the year but Scott Nations – Founder of Nations Indexes recommends taking profits now as that strength will likely vanish moving forward.
Why Nations is bearish on Airbnb stock
At the current valuation, Nations dubs the vacation rental company meaningfully more expensive to own than its peers in the travel and tourism industry.
Airbnb is much more expensive than all the other travel names. Forward PE is 36.5. That’s six times what it is for legacy air carriers and three times what it is for Expedia. So, Airbnb stock is a sell here.
Nonetheless, the Nasdaq-listed firm is expected to earn 25 cents a share in its current financial quarter. That’s significantly better than 8 cents it earned a year ago.
Airbnb stock is up over 20% for the year at writing.
Airbnb stock should be worth $87 only
Earlier in January, the New York City passed a new law that requires short-term rental hosts to register with the Mayor’s Office of Special Enforcement. On CNBC’s “Power Lunch”, Nations also said:
Airbnb has no brand loyalty versus competitors. The recent conversation about fees goes to the heart of value proposition. That’s not just a PR problem. The question becomes, where does the growth come from to justify that valuation.
His dovish is in line with Gordon Haskett that downgraded the Airbnb stock to “underperform” on Wednesday.
Analyst Robert Mollins now sees downside in its shares to $87 – about a 15% downside from here.
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