Airbnb (NASDAQ: ABNB) shares have advanced more than 28% since the beginning of January 2021, and the current share price stands around $188. Airbnb is a promising company, but with the expected continued headwinds, this is a risky investment at the current share price.
Fundamental analysis: The company’s business remains under pressure
Airbnb operates an online marketplace for lodging, primarily homestays for vacation rentals and tourism activities. The company is based in San Francisco, and its platform is accessible via the website and mobile app.
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The coronavirus pandemic environment impacts the business of the company, and the business is still struggling to recover to pre-Covid levels. Newly reported COVID-19 cases are back on the rise, and worries over a third pandemic wave could add pressure on the travel industry again.
Airbnb reported Q4 results in February; total revenue has decreased by -22.6% Y/Y to $859M while Q4 GAAP EPS was -$11.24 ( missed by $2.43). Total revenue has decreased below expectations and the company’s management hopes for the business recovery that could happen in the upcoming months.
“Looking forward to 2021, we are preparing for the travel rebound. Our single priority in 2021 is to prepare for this travel rebound, perfecting our existing product by improving the entire end-to-end experience of our core service for both Hosts and guests,” the management of the company reported.
Last month, Airbnb raised $2B through convertible notes offering, which will be used to fund the cost of entering into the capped call transactions and repaying indebtedness. Some analysts see this company as a top recovery “pick,” and once the pandemic is over, the company’s bookings and revenue will begin to grow.
Technically looking, Airbnb shares could advance above the current price levels this April, but the risk/reward ratio is not good enough for “value” investors. With the market capitalization of $112B, this stock is not undervalued, the company’s business remains under pressure, and maybe it is not the right moment to buy Airbnb shares.
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Technical analysis: $200 represents the strong resistance level
Airbnb shares have weakened from their record highs above $219 registered in February, and the current price stands around $188. The important support levels are $180 and $160; $200 and $220 represent the important resistance levels.
If the price jumps above $200, it would be a signal to trade Airbnb shares, and the next target could be around $210, but if the price falls below the $160 support level, it would be a firm “sell” signal.
Airbnb is a promising company, but with the expected continued headwinds, this is a risky investment at the current share price. Newly reported COVID-19 cases are back on the rise, and worries over a third pandemic wave could add pressure on the travel industry again.