Airbnb (NASDAQ:ABNB) looks set to recover fallen prices as the pandemic eases and travel increases. The share price tried to retest highs in November, reaching $212 (highs are $220). However, amongst a global market sell off, the price fell to $135. The market has stabilised to a degree and many names have made good progress in the last week compared to the starting weeks of the year. Is it time for Airbnb to make some progress?

Lockdown

Global lockdowns during heights of the pandemic have been the main driver behind price crashes for the Airbnb stock. Many believe we are in the latter stages of the global pandemic, with many old ways of life coming back to normality, such as the travel industry.

This industry is likely to see much pent-up demand after being mostly out of action for two years. Airbnb is likely to thrive this year as they offer locations that are social distanced which may appeal to a larger audience. This could lead to 2022 seeing ABNB post their first full-year profit as they continue to operate on a business model that is asset light with a high operating leverage.

Volatility

Although the outlook remains strong for Airbnb, internet stocks have seen much volatility in the last months. The price is likely to chop around in wide price ranges. But with a longer term view of this investment, we see a nice upside potential as the company will look to re-establish dominance in a sector set to thrive this year.

Risks

Obvious risks of new Covid variants could slow progress down for the company. Although, the progress of vaccine rollouts in 2021 has seen variants such as Omicron cause less of an impact on the world. Hospital rates have remained low meaning communities can continue with relative ease, not needing strong lockdowns.

Technical

The daily chart has been in a downtrend since the end of last year. A break of this trend would be strong for the bullish side of ABNB. The price would need to close above $160 for this to happen.

Chart provided by TradingView

The weekly chart shows the larger fluctuations of the share price. The bottom of the range ($130-$140) has held up multiple times. The top of the range ($210-$220) has been tested twice, with the latest test failing to break above. This is a long term target for the price. If this were to breakthrough, the price could see a nice leg up.

Chart provided by TradingView

Earnings

Earnings are due on February 15th. With recent earnings from Meta, Amazon and Alphabet, we know that these can cause huge fluctuations in price, not seen before from companies of this size. Earnings can be a gamble as there is no edge of knowing if expectations will be beat or not. We will be looking to see the earnings results and the respective price changes and evaluate a possibility for an entry after that.

Leave a Reply