Here’s Why Airbnb Shares Were Downgraded at Morgan Stanley This Week

Morgan Stanley analyst Brian Nowak went against the general consensus on Wall Street when he downgraded Airbnb (NASDAQ: ABNB) shares to Underweight from Equal Weight in a note to clients this week.

According to analyst rating firm TipRanks, 12 out of 25 analysts have a Buy rating on ABNB shares, while 11 have a Hold rating, and just two have a Sell bias. The average price target is currently $128.36 per share, representing a potential 41% upside. 

However, Airbnb shares are down over 45% in 2022, as macroeconomic headwinds weigh on the stock and the outlook for future travel demand.

Nowak cut the firm’s price target on Airbnb to $80 from $110, telling investors in his research memo that required forward supply has been a critical debate since the IPO and his analysis of company and third-party data suggests Airbnb currently has 6.2M active listings and about 1.1 billion room nights available to be booked. 

The analyst added that active listings have grown at a 12% CAGR between 2018-2022, but he sees this slowing to 7% in 2022-2025 based on scale and the “law of large numbers.” He also said slowing supply creates an occupancy headwind and lower forward room night demand.

In late November, Baird analyst Colin Sebastian also downgraded Airbnb to Neutral from Outperform with a price target of $100, down from $120, stating that the company is exposed to a pullback in discretionary “high ticket” purchases. While Sebastian has a positive long-term view of Airbnb, in the short term, he is “more concerned” about risks to discretionary travel spending and average daily rates due to inflationary and recessionary pressures.

Airbnb closed Wednesday’s session down 1.74%, while in 2022, the stock has declined by 44%.