As the broader travel market continues to defy gravity, popular online homestay marketplace Airbnb (NASDAQ:ABNB) is reaping the rewards. So far this year, ABNB stock has gained about 75%. On Friday, shares are returning more than 2% for stakeholders as well, with many anticipating sustained growth. Still, investors will want to monitor any possible shifts in the consumer economy and respond accordingly.
For the time being, though, ABNB represents a hot ticket on Wall Street. With its strong showing today, the ticker is printing a new 52-week high of nearly $150. Compare that to $81.91 per share, the low end of its range set in December 2022 amid the Federal Reserve’s hawkish monetary policy.
What the bears didn’t count on for Airbnb was the sustained resilience of “revenge travel,” or the desire to make up for lost time and experiences after the pandemic. This phenomenon was a clear catalyst last year and, fortunately, demand has spilled over into 2023.
Interestingly, Airbnb saw significant growth in its North America and Latin America markets in the first quarter of 2023. With Asia reopening slowly as well, that market could provide the company with even more growth.
ABNB Stock Rises on Possible Growth Confirmation
Airbnb will release Q2 2023 results on Aug. 3. Given the broader sentiment in the travel market, many investors are likely anticipating a strong report. Therefore, ABNB appears to be rising ahead of the positive disclosure. Still, prospective investors do need to be careful.
For example, while Airbnb posted growth on increased bookings despite economic uncertainties in Q1, shares sank on a cautious forecast. Further, while total active listings grew 18% year-over-year (YOY), this growth represented “only a slight uptick from the 16% growth the company saw the prior quarter.” Put another way, unless Airbnb delivers a runaway performance, the stock still presents risks.
The New York Times reports that, while the broader concept of retail revenge has helped push prices higher, more recent data suggests that the trend may be turning. Indeed, indicators for inflation suggest that the pace of consumer price growth is declining. If a slowing in “revenge” categories is happening, that’s not necessarily a great sign for ABNB stock.
Of course, much of where the wider travel market may eventually land depends on the Fed. If policymakers decide that more needs to be done to tackle inflation decisively, they may raise interest rates. Naturally, this framework would probably negatively impact ABNB stock.
Why It Matters
Right now, Wall Street analysts peg ABNB stock as a consensus “moderate buy” on TipRanks. Their average price target for shares lands at $129.60, implying 13% downside risk.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
