Here’s why ABNB is a strong buy

The Airbnb (NASDAQ: ABNB) stock price has gone nowhere even after the company published spectacular results this week. The shares are trading at $150, which is a few points above this week’s low of $140.

Valuation concerns remain

The Airbnb share price has moved sideways in the past few days as concerns about the company’s valuation remain. The company has a market capitalization of over $97 billion, making it the biggest player in the hospitality industry. Therefore, investors assume that the company’s future growth has already been priced in.

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Earlier this week, the company said that it had a strong first quarter. There were over 100 million bookings in the quarter for the first time ever. This translated to a gross booking value of over $17 billion and revenue of $1.5 billion. The firm managed to narrow its loss to just $19 million while iys EBITDA rose to 15%.

The company attributed its performance to the fact that the number of people booking in the ecosystem jumped. At the same time, these people are booking for a longer duration. The company has also launched products to help people discover new places, which has boosted its growth. 

While the Airbnb stock price has retreated from its all-time high, I believe that the stock will bounce back. For one, the firm has a strong brand recognition even as it faces strong competition from the likes VRBO and HomeAway. 

Another catalyst is that the volume of people traveling will keep rising as the Summer season kicks in. I believe that people who didn’t travel during the pandemic will do revenge traveling later this year. While Covid-19 is still around, more people are a bit relaxed about it. This will likely bring more incremental value for the company. 

Airbnb stock price forecast

The daily chart shows that the Airbnb stock price has been in a downward trend in the past few days. The stock has managed to move from a high of $180 in April to the current $150. A closer look shows that the stock has moved below the 25-day and 50-day moving averages. At the same time, it is forming what looks like a triangle pattern that is shown in black. The MACD has moved slightly below the neutral level.

Therefore, the ABNB stock price will likely continue pulling back in the near term. In the long-term, there is a likelihood that the shares will move above the resistance at $200.

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