An Airbnb logo (download app page) displayed on a smartphone is seen in L’Aquila, Italy, on september 9th, 2023. Some metropolises and countries are imposing restrictions on Airbnb hosts to protect the hotel industry. (Photo by Lorenzo Di Cola/NurPhoto via Getty Images)
NurPhoto via Getty Images
Airbnb (ABNB) may be a solid choice for your investment portfolio, given its high cash yield, strong fundamentals, and attractive valuation. Companies like this have the ability to utilize cash to drive further revenue growth or to reward their shareholders via dividends or share buybacks. Both strategies make them appealing to the market. Additionally check, Is Walmart Stock Outperforming Its Rivals?
Current Developments with ABNB
Although ABNB is down -13% this year, it is currently trading at a P/S (Price-to-Sales) ratio that offers a significant discount compared to its 3-month and 2-year peaks, and is also below its 3-year average.
The stock may not yet show it, but there are positive developments for the company. Airbnb posted impressive Q3 2025 results, with Nights and Seats booked increasing by 9% year-over-year, marking an acceleration from Q2. Active listings have surpassed 8 million worldwide, and average daily rates have stabilized at $173 in 2025. The company is broadening its offerings with Airbnb Experiences and a hotel pilot program while incorporating AI to enhance user experience. The revenue forecast for Q4 projects showed an increase of 8.5% year-over-year, surpassing analyst expectations.
ABNB’s Strong Fundamentals
- Robust Cash Yield: Few stocks provide a free cash flow yield of 6.6%, but Airbnb stock does.
- Impressive Margin: The operating margin for the last 12 months stands at 22.6%.
- Growth: The last 12 months of revenue growth is 10.2% – while this is modest growth, this choice prioritizes high yield and margin.
- Valuation: ABNB stock is currently trading at 32% less than its 2-year high, 11% below its 1-month high, and at a P/S lower than its 3-year average.
Below is a brief comparison of ABNB’s fundamentals with S&P medians.
*LTM: Last Twelve Months
What Are the Risks Involved?
While investing in ABNB stock may appear to be a favorable opportunity, it’s crucial to understand the stock’s history of downturns. Airbnb’s stock fell approximately 14% during the Covid pandemic and suffered a much steeper decline, plunging nearly 62%, during the inflation shock of 2022. Despite a strong brand and robust business model, the stock has not been shielded from severe sell-offs. This serves as a reminder that market disruptions can still lead to significant corrections, regardless of a positive outlook. However, the risks are not confined solely to major market crashes. Stocks tend to decline even in strong markets due to factors such as earnings reports, business announcements, or changes in outlook. Refer to ABNB Dip Buyer Analyses to understand how the stock has bounced back from sharp declines previously.
To explore more details and our perspective, see Buy or Sell ABNB Stock.
Stocks Similar to ABNB
Not ready to make a move on ABNB? Consider these options:
We selected these stocks based on the following criteria:
1. Market capitalization exceeding $2 billion
2. Price dipped last month & significantly below its 2-year peak
3. Current P/S less than the average over the past few years
4. Strong operating margin without significant incidences of margin decline
5. High free cash flow yield
A portfolio consisting of stocks that meet these criteria would have performed as follows since 12/31/2016:
- Average forward returns of 10.4% and 20.4% for 6-month and 12-month periods, respectively
- A success rate (percentage of selections yielding positive returns) of about 74% over a 12-month duration
- Consistent strategy performance across various market cycles
Portfolios Outperform Stock Picking
Individual stock selections can be unpredictable, but being invested is what truly counts. A well-diversified portfolio allows you to stay the course, seize growth opportunities, and mitigate risks.
The Trefis High Quality (HQ) Portfolio, comprising 30 different stocks, has a history of comfortably outpacing its benchmark, which includes the S&P 500, S&P mid-cap, and Russell 2000 indices. What accounts for this? In general, HQ Portfolio stocks have delivered stronger returns with lower risk compared to the benchmark index; this is reflected in HQ Portfolio performance metrics.
