Is Airbnb a commission-increasing purchase, international growth?

Airbnb Inc. NASDAQ:ABNB is in a buying range outside of the slow consolidation that began on July 31st.

Airbnb’s chart shows the stock’s strong upward momentum in the January 26 and 29 sessions. The stock is nearing its late-July high of $154.95, and the strong momentum indicates institutional buyers are jumping on board.

The catalyst was the company’s announcement that it would add an extra fee for cross-currency bookings.

Starting in April guest service will increase to 16.5% from 14.2% for cross currency transactions. Airbnb announced the change on its page detailing the service’s fees.

This rate adjustment coincides with the San Francisco-based company’s efforts to expand international business.

“Great results” in new markets

In its third-quarter earnings report in November, the company said: “We are investing in underpenetrated international markets and achieving excellent results. Following success in recent quarters in Germany and Brazil, Korea has now become one of our fastest-growing countries in 2019, with the gross number of nights booked 54% higher than in the third quarter of 2019 based on origin”.

Nights booked abroad grew 17% year-on-year in the third quarter. The company said its Asia Pacific business has fully returned to pre-pandemic levels.

The company withdrew its listings in China in 2022, citing increased domestic competition and the effects of pandemic-related shutdowns. However, travelers departing from China account for a much larger share of Airbnb’s revenue.

Small Asia-Pacific markets grow more than 30%

Outbound travel from China more than doubled in the quarter, while smaller Asia Pacific markets such as Taiwan, the Philippines, Thailand, Hong Kong and Indonesia saw year-over-year growth above 30%.

North America still accounts for the majority of Airbnb bookings, but in the third quarter the company saw only a modest acceleration in year-over-year growth in nights and experiences booked in North America.

Forecasts from Airbnb analysts at MarketBeat show Barclays’ price target rising to $110 from $100 after the fee increase. This is lower than where the stock is currently trading, but it is not necessarily a decline for the stock.

Analyst price increases may be lower than the current stock price due to factors such as conservative projections, market uncertainties, or gradual adjustments to reflect long-term growth expectations. Goals generally reflect expectations for the next 12 to 18 months; a lot can change in that time and pullbacks are normal and predictable.

Additional $290 million in revenue

In other analyst action, analysts at investment bank and financial services firm BTIG predict the new fees could bring in an additional $290 million in revenue for Airbnb this year.

Investors have found that Airbnb stock is mostly a roller coaster ride, not the sandy beach of a dream vacation.

The stock has a beta of 1.69, meaning it is 69% more volatile than the market average, as determined by the S&P 500, of which Airbnb is a component.

It joined the large-cap index in September 2023. Airbnb replaced Newell Brands Inc. NASDAQ: NWLwhich, with a market cap of $3.62, is most adequately replicated in the SPDR Portfolio S&P 600 Small Cap ETF NYSEARCA: SPSM.

Airbnb is tracked with Consumer Discretionary stocks in the SPDR Consumer Discretionary Select Sector fund NYSEARCA: XLY. Over the past five sessions, Airbnb has been the sector’s third-best performer, behind branded apparel maker VF Corp. New York Stock Exchange: VFC and automotive parts maker Aptiv PLC New York Stock Exchange: APTV.

Double-digit revenue growth, despite challenges

Airbnb’s three-year revenue growth rate of 18% was achieved despite an apparent continuing wave of challenges, mostly related to its business model. According to recent reports, which may be anecdotal, Airbnb hosts are converting their rental properties into long-term rentals, as they realize that the costs associated with hosting are higher than they expected.

Additionally, a growing number of communities are cracking down on short-term rentals, particularly in cities where housing is expensive and tourism is high. For example, New York City last year began enforcing rules requiring all hosts eligible for short-term rentals to be registered with the city.

Growing regulatory challenges may be part of the reason behind the growing push internationally. According to Factset, analysts expect Airbnb to make about $11 billion in revenue this year, which would be an increase from the $9.849 billion forecast for 2023, which the company reports around Feb. 13.

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