Yahoo Finance Do Airbnb’s Billion-Dollar Q3 Profits Translate to a Worthwhile Stock Investment?
In spite of inflation, economic uncertainty and fears of an impending recession, the short-term vacation rental market is looking up. Airbnb reported third-quarter profits of $1.21 billion — an all-time high for the company.
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“The third quarter of 2022 demonstrates we continue to drive growth and profitability at scale. Guest demand on Airbnb remains strong, our Host community continues to grow, and this was our most profitable quarter ever,” said Airbnb co-founder and CEO Brian Chesky.
Net income was up 46% year-over-year, the CEO stated, while Nights and Experiences Book rose 25% since Q3 2021.
Chesky outlined some of the reasons for the growth, including strong guest demand and new use cases, such as long-term stays and non-urban travel. He also pointed out “strong growth” in new Airbnb guests, as people look to fight inflation through rental income.
However, despite the record-high earnings, Airbnb stock prices dropped roughly 7% following the Q3 earnings statement, U.S. News reported, and is down around 9% Wednesday morning.
The company undoubtedly faces challenges as we move into the new year, including fundamental challenges in the pricing structure, pricing transparency, and increasing demands on the part of both hosts and guests. Airbnb stock has dropped 42% in the past year, with most of the decline occurring through the spring and summer months.
So is this a situation where you should “buy low” in the hopes of Airbnb stock turning into a solid investment?
Many investment websites are calling Airbnb stock overvalued right now, with AAII.com giving it an F value grade. Likewise, Zacks.com gives it a value score of D. However, Zack’s is calling Airbnb, which is trading at $99.90 on the morning of November 2, a strong “buy now” for momentum investors, which speaks to the ongoing strength of the company.
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If ongoing issues can be addressed and travel continues at its current pace, with international travel expanding, the stock could be a good buy and hold investment. If you follow Warren Buffett’s credo of not owning a stock for even 10 minutes if you aren’t willing to own it for 10 years, experts say it could be worth taking a chance on Airbnb.
The Motley Fool says Airbnb has long-term opportunity, especially in the international market. “A rapidly growing company with strong free cash flow isn’t often cheap,” it writes.
With that in mind, it might be worth dollar-cost averaging to accumulate shares slowly if the price continues to drop. This way, you may position yourself for long-term gains while spreading out your risk.
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This article originally appeared on GOBankingRates.com: Do Airbnb’s Billion-Dollar Q3 Profits Translate to a Worthwhile Stock Investment?
