Is Airbnb Stock a Buy?
If you're bearish on Airbnb (NASDAQ: ABNB) stock, you probably don't like its lack of profits -- the company has never been profitable, and it had a staggering $4.6 billion net loss in 2020. Furthermore, shares trade at a pricey valuation, with a price-to-sales (P/S) ratio of about 32.
The Airbnb bulls, of course, have counterarguments for the bears. First, they'll point out that many top stocks aren't profitable because they're focusing on growth. Moreover, Airbnb stock perhaps looks more pricey than it actually is. The COVID-19 pandemic temporarily suppressed travel, negatively affecting Airbnb's revenue for 2020 and consequently elevating its P/S ratio. But now with coronavirus vaccinations being distributed, the economy is poised for a rebound to Airbnb's benefit.
The bears say it's an overvalued cash-burning machine, while the bulls say the high price and lack of profits are justified by its growth opportunities. However, both arguments are probably overly simplistic. For the record, I do believe this is a stock to buy and hold. But there's a nuanced explanation you'll want to consider.
Source Fool.com
