KUV 15 after Q1: Why are Airbnb investors willing to pay this price?

The proportion of Airbnb (NASDAQ: TSFT) has a ridiculous price tag, even at its first quarter numbers. With a market capitalization of $ 92 billion and sales of $ 1.5 billion for the most recent quarter, this equates to a price-to-sale multiple of 15 on an annual basis.

The intriguing question for me at this point is: Why are investors willing to pay such a high a price for Airbnb’s share? Both the market value and the price-to-sales ratio speak for a fundamentally neither small nor favorable starting position.

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As a starting point, the figures for the first quarter provide a starting point. But there is much more to this potential than that. Let’s think a little about the long-term options.

Airbnb: Short-term drivers

Apparently, Airbnb investors are acknowledging a strong short-term outlook. For example, revenue growth was 70% last quarter. In addition, management shows a comparative value from before the pandemic. Here, sales growth has now even reached 80% year-on-year.

At the same time, management manages to get ever closer to profitability. In the first quarter, the net loss was only $ 19 million. A low value that can indicate positive results. But that is certainly not all.

In essence, Airbnb can now alert an opening scenario at short notice. In the spring and summer of this year, there should also be opportunities to profit disproportionately again. But a price-to-sale ratio of 15 is certainly not cheap. This means that foolish investors have to ask themselves: where is the long-term potential?

The potential to challenge the travel industry

Investors are not currently investing in Airbnb shares because they see it as a good fringe player for the travel industry. Honestly, the $ 92 billion exceeds the stock market valuation of many other travel companies. Even for platform operators, this is a high rating. In that respect, it must inevitably be about more.

For me, it’s more that investors in Airbnb see a significant share in the way we book going forward. This means that these private ads can take a strong market share of the entire travel market and this platform operator is a real challenger for the entire industry.

The key question is: how likely is it that this scenario will occur? A market value of $ 92 billion and a price-to-sale ratio of 15 show that investors are willing to pay a high price for this opportunity. Investors who are still stocked with the stock should definitely take that into account.

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Vincent owns none of the aforementioned shares. The Motley Fool owns shares of and recommends Airbnb.

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