Airbnb has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 16.8% to $130.48 per share while the index has gained 13.2%.
Is ABNB a buy right now? Find out in our full research report, it’s free.
Why Is ABNB a Good Business?
Founded by Brian Chesky and Joe Gebbia in their San Francisco apartment, Airbnb (NASDAQ: ABNB) is the world’s largest online marketplace for lodging, primarily homestays.
1. Nights and Experiences Booked Drive Additional Growth Opportunities
As an online travel company, Airbnb generates revenue growth by increasing both the number of stays (or experiences) booked and the commission charged on those bookings.
Over the last two years, Airbnb’s nights and experiences booked, a key performance metric for the company, increased by 9.1% annually to 156.2 million in the latest quarter. This growth rate is solid for a consumer internet business and indicates people are excited about its offerings. 
2. EBITDA Margin Reveals a Well-Run Organization
Operating income is often evaluated to assess a company’s underlying profitability. In a similar vein, EBITDA is used to analyze consumer internet companies because it excludes various one-time or non-cash expenses (depreciation), providing a clearer view of the business’s profit potential.
Airbnb has been a well-oiled machine over the last two years. It demonstrated elite profitability for a consumer internet business, boasting an average EBITDA margin of 35.3%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Airbnb has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the consumer internet sector, averaging an eye-popping 37.2% over the last two years.
Final Judgment
These are just a few reasons why we think Airbnb is a high-quality business, but at $130.48 per share (or 14.3× forward EV/EBITDA), is now the right time to buy the stock? See for yourself in our full research report, it’s free.
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