Should I buy Airbnb shares after Wells Fargo raised its price target?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Jun 15, 2021
  • Wells Fargo has raised its price target to $200 on Airbnb after the first-quarter earnings report
  • If the price jumps above $160, the next target could be around $170
  • Lots of positive expectations have already been included in the stock price

Airbnb, Inc (NASDAQ: ABNB) shares are advancing last several weeks, and the technical picture implies that the price could reach $160 resistance this month. Airbnb will benefit from travel recovers, but this company is not undervalued at the current stock price.

Fundamental analysis: Wells Fargo has raised its price target to $200 on Airbnb

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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Airbnb shares continue to be supported after the company reported its first-quarter results last month. Total revenue has increased by 5.4% Y/Y to $886.9 million, while the GAAP EPS was -$1.95 (missed by $0.81).

It is important to mention that the company attracted over $10 billion of bookings during the first quarter of 2021, representing an increase of over 50% from the same prior-year period. Wells Fargo has raised its price target to $200 on Airbnb after the first-quarter earnings report as it sees this company well-positioned for success in 2021 and, more importantly, beyond.

“Airbnb produced strong 1Q results, which we view as demonstrating the company’s positive momentum exiting the pandemic. We view Airbnb as likely the strongest play on the future of remote and hybrid work, and with shares now trading below ABNB’s IPO price and well below our price target, we view risk-reward as attractive at current levels,” Wells Fargo reported.

Looking forward, Airbnb has strong growth prospects, but with a market capitalization of $90.30 billion, we can notice that this stock is not undervalued. The company’s EBITDA is negative, the book value per share is around $5, and lots of positive expectations have already been included in the stock price.

Technical analysis: $160 represents the first resistance level

Technically looking, Airbnb shares could advance above the current price levels this June, but the risk/reward ratio is not good enough for “value” investors.

Data source: tradingview.com

Airbnb shares are advancing last several weeks, and for now, the positive trend remains intact. If the price jumps above $160, the next target could be around $170, but if the price falls below the $140 support level, it would be a firm “sell” signal.

Summary

Airbnb shares continue to be supported as Wells Fargo raised its price target to $200 after the first-quarter earnings. Wells Fargo sees this company as a top recovery “pick” and well-positioned for success in 2021 and, more importantly, beyond. Airbnb will benefit from travel recovers, but this company is not undervalued at the current stock price.

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