Airbnb’s Growth Challenges: High Valuation and Scaling Hurdles Lead to Sell Rating

Morgan Stanley analyst Brian Nowak maintained a Sell rating on Airbnb (ABNB – Research Report) yesterday and set a price target of $125.00.

Brian Nowak has given his Sell rating due to a combination of factors that suggest challenges for Airbnb’s growth prospects. One key concern is the high valuation premium of over 20% compared to other platforms, which seems to already account for potential success in expanding their experiences and services offerings. This premium may limit further upside potential for the stock.
Additionally, while the total addressable market for Airbnb’s new experiences and services is significant, doubling from approximately $900 billion to $2 trillion, scaling these offerings to a level that materially impacts revenue and EBITDA is not straightforward. The difficulty lies in achieving substantial consumer adoption and spending, as even a modest 1% increase in consumer engagement would require around $1 billion in annual recurring gross booking value. These challenges contribute to the cautious outlook and the Sell rating.

According to TipRanks, Nowak is a 5-star analyst with an average return of 6.4% and a 60.85% success rate. Nowak covers the Communication Services sector, focusing on stocks such as Alphabet Class A, Meta Platforms, and Pinterest.