Why Airbnb (ABNB) is a Hot Buy Ahead of Next Week's Earnings
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I'm stoutly Bullish on Airbnb stock ahead of next week's earnings report, expected to hit the market after market close on Wednesday, August 6th. Ultimately, I see a stock driven by margin expansion, new verticals, and a recovering travel market that is set to unlock fresh revenue opportunities.
Airbnb's Q1 Earnings Beat Expectations
Taking a step back, on May 1, Airbnb posted solid Q1 2025 results, delivering an EPS of $0.24 versus the Street's expectation of $0.23. Revenue climbed 6% year-over-year to $2.27 billion, slightly above the $2.26 billion consensus estimate. Gross booking value rose 7% to $24.5 billion, supported by 143.1 million nights and experiences booked, up 8% from the year-ago period.
However, the company issued a more muted Q2 revenue outlook, guiding for $2.99 billion to $3.05 billion, slightly under the $3.03 billion consensus at the midpoint. Despite this, Airbnb reaffirmed its full-year adjusted EBITDA margin guidance of at least 34.5%, signaling confidence in its cost management and pricing power.
Since the May earnings release, Airbnb stock has gained 9.2%, underperforming the S&P 500's 12% rise. So far this year, Airbnb is up just 4.13% versus the index's 8.32% gain, suggesting plenty of room for a catch-up rally. The stock's most recent price action indicates fairly strong bearish sentiment, which has pushed the stock lower for the past three days in a row.
What to Watch Out for on August 6th
Airbnb market analysts have been slowly raising their forecasts leading into next week's performance figures: consensus EPS estimates have climbed from $0.88 to $0.94 since the last earnings report, reflecting growing optimism.
I believe the company's EBITDA margin guidance remains conservative and expect upside in both profitability and topline performance. Key catalysts include improving attach rates in Airbnb's Experiences and Services segments, as well as a broader rebound in global travel.
Notably, — and in both cases, the stock traded higher the following day.
Redesigned App Signals Strategic Pivot
Airbnb's newly redesigned app, launched in May this year, introduces distinct tabs for Homes, Experiences, and Services, a signal of the company's ambition to become more than just a lodging marketplace.
In a recent Bloomberg interview, CEO Brian Chesky shared that Airbnb wants to emulate Amazon in the Services sector. With two-thirds of U.S. jobs currently reliant on this particular part of the U.S. economy, this pivot dramatically expands the company's total addressable market.
According to the ambitious CEO, his goal is to build a full-scale services platform where users can book not just homes, but also experiences, local services, and more. I expect this initiative alone could eventually drive an incremental $10 billion in annual bookings.
Airbnb's Valuation is High, But Justified
Yes, Airbnb trades at a premium: its trailing 12-month P/E ratio stands at 35.8, compared to a sector median of just 19.6. But I believe this premium is justified by the company's midterm revenue growth potential and expanding margins.
Consensus projects around 9.5% midterm revenue growth, which I view as conservative given accelerating trends in its core markets and the Services vertical. My own valuation work, based on 12 models including EV/EBITDA, P/E, and 10-year DCF with an EBITDA exit, suggests a fair value of $153.90, implying over 12% upside from current levels.
What is the 12-Month Price Target for Airbnb?
According to TipRanks, Airbnb holds a Hold consensus rating, based on 28 recent analyst reviews, which includes eight Buys, 14 Holds, and six Sells. ABNB's average stock price target is $135.71, implying ~2.5% upside over the next twelve months.
That said, July saw a string of price target hikes and positive analyst actions, reflecting growing confidence ahead of earnings.
Bernstein SocGen reiterated its Outperform rating and $165 target, commenting that Airbnb is currently going it alone in Services and Experiences, sourcing both supply and demand through its own brand marketing. Bernstein noted that the company could accelerate growth by partnering with established platforms for services it doesn't yet offer—like airport transfers, car rentals, or gear rentals—and by expanding visibility, such as bidding on high-intent search terms like 'Experiences Paris.' While they expect Airbnb to stick with its current strategy for now, these tactics could drive broader adoption and usage.
In addition, Deutsche Bank maintained its $125 price target with a Hold rating, while Swiss bank UBS lifted its target to $156 from $137 with a Neutral rating.
Airbnb is Poised to Surprise
Airbnb isn't just another travel stock. It's evolving into a powerful digital services platform, with high margins, ample cash flow, and a visionary CEO charting bold new territory.
With profitability gaining strength, vertical expansion underway, and a potentially transformative strategy shift in motion, I believe Airbnb is positioned for acceleration in the coming quarters. For investors seeking growth in a dynamic, post-pandemic travel-tech landscape, Airbnb may be worth buying in advance of next week's earnings news.
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