Key Takeaways:
- Airbnb Services and revamped Experiences have launched in 260 cities, targeting travelers and locals.
- Non-core markets deliver double the growth of established regions, with Latin America posting low-20s growth rates.
- Airbnb ended Q1 with $11.5 billion in cash and $4.4 billion in trailing free cash flow.
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Valued at a market cap of $78 billion, Airbnb (ABNB) operates a platform that enables hosts to offer guest stays and experiences worldwide. Its marketplace connects hosts and guests online to book spaces, experiences, and gift cards.
ABNB stock went public in September 2019 and has since returned -22% to shareholders, grossly underperforming the broader markets.
However, let’s see why Airbnb stock remains a top investment option in May 2025.
Here are three reasons why ABNB stock is a good buy at the current valuation.
1. Airbnb Expands Beyond Its Core Business
The key catalyst for Airbnb stock’s future growth lies in the company’s ambitious expansion beyond traditional home rentals.
Airbnb recently launched its highly anticipated Summer Release, introducing Airbnb Services and revamping Airbnb Experiences alongside a completely redesigned app. This represents CEO Brian Chesky’s long-promised evolution to take the platform beyond the core offering.
The new services marketplace includes 10 categories, including professional chefs, massage therapy, photography, and personal training, and will launch in 260 cities worldwide.
This is particularly compelling because these services aren’t limited to travelers, as locals can also utilize them, expanding Airbnb’s addressable market.
With plans to invest $200-250 million in scaling these new businesses, analysts view it as a potential game-changer for ABNB stock that could drive meaningful revenue diversification over the coming years.
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2. A Focus on International Market Penetration
Airbnb’s international expansion strategy continues to show exceptional promise for ABNB stock, with non-core markets outperforming established regions. For the fifth consecutive quarter, expansion markets delivered growth rates more than double those of core markets, with some regions like Latin America posting low-20s growth rates.
Brazil exemplifies this success, with origin nights growing 27% in Q1 and first-time bookers increasing over 30%.
Airbnb’s localized approach, including introducing payment methods like Pix in Brazil and targeted marketing campaigns in Japan, demonstrates the scalability of this strategy.
With only five countries representing two-thirds of Airbnb’s business, the international opportunity remains vast and untapped, providing substantial upside potential for Airbnb stock investors.
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3. A Healthy Balance Sheet
Analysts remain impressed by Airbnb’s robust financial performance and operational discipline, key factors supporting their bullish stance on Airbnb stock.
Despite growth headwinds, Airbnb generated $1.8 billion in free cash flow during Q1 2025, maintaining a healthy 78% free cash flow margin. Over the trailing twelve months, Airbnb produced $4.4 billion in free cash flow, representing a 39% margin.
Airbnb’s quality initiatives are also paying dividends. Since launching its updated hosting quality system, Airbnb has removed over 450,000 substandard listings while introducing Guest Favorites, which has already generated over 350 million bookings.
This focus on reliability and quality addresses one of the primary concerns travelers historically had about choosing Airbnb over hotels.
With $11.5 billion in cash and investments, Airbnb possesses the financial flexibility to weather economic uncertainty while investing in growth initiatives.
Analysts note that the company’s adaptable business model, proven during both the 2008 financial crisis and the COVID-19 pandemic, positions it well to navigate current macroeconomic challenges while capitalizing on long-term travel recovery trends.
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Valuation Setup for ABNB Stock
Analysts tracking Airbnb expect its sales to rise from $11 billion in 2024 to $14.5 billion in 2027. Comparatively, adjusted earnings are forecast to expand from $4.11 per share in 2024 to $5.60 per share in 2027.
ABNB stock trades at a forward price-to-earnings multiple of 30x, lower than its three-year average multiple of 34x.
If ABNB stock trades at 33x forward earnings, it will be priced around $185 in early 2027, indicating an upside potential of almost 46% from current levels.
Of the 45 analysts tracking ABNB stock, 14 recommend “Buys”, 25 recommend “Hold,” and six recommend “Sell”.
Wall Street remains bullish on ABNB stock and, given consensus price targets, expects it to gain 9% from current levels. Notably, Airbnb stock has a high target price of $200 and a low target price of $96 in May 2025.
TIKR Takeaway for Airbnb Stock
Despite Airbnb stock’s -22% return since going public and recent growth headwinds, analysts maintain a bullish outlook based on compelling fundamentals.
The company’s strategic expansion into services and experiences, combined with accelerating international growth and robust financial health, positions ABNB stock for significant upside.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
