Airbnb Inc (ABNB)

Conclusion

Airbnb operates an online marketplace that connects hosts and guests for stays, experiences and services, and it sells gift cards. At 189.99 USD on 6 November 2026, the shares give a market capitalisation of 80.7 billion USD.

The verdict is undervalued. The fair value band runs from 215.23 to 322.85 USD with a midpoint of 269.04 USD, a margin of safety of 41.6% at the current price. Price to free cash flow stands at 16.1x against a ten-year median of 26.0x, price to sales at 5.8x against 10.4x, and price to book at 8.7x against 14.2x. The DCF gives 225.98 USD per share at a discount rate of 11.23%. The reverse DCF implies revenue growth of 13.1% a year, while revenue grew at a five-year compound rate of 29.5% and a three-year rate of 13.6%.

What holds the case up is the five-year revenue growth of 29.5%, the operating margin of 22.6% against a ten-year median of 7.2%, and free cash flow conversion of 156.5% on a trailing basis. What would break it is a fall in growth towards the 13.1% the price implies, and a return of margins towards their historical medians. The weakest numbers are the 53.5% share of the DCF held in the terminal value, stock-based compensation at 12.7% of revenue, and a Piotroski score of 5 out of 8.

Financial health

Financial strength is green, held up by a current ratio of 1.73, a quick ratio of 1.64 and an Altman Z-score of 4.34 in the safe zone. The company does not report its interest expense, and the debt figure is not available, so net debt to EBITDA, debt to equity and interest coverage cannot be assessed. The Altman model was designed for manufacturers, and Airbnb is not one, so the zone is an approximate guide only. Insolvency risk is low, about 0.4% by the estimate of the Ohlson model over one to two years. Debt has fallen against revenue over five years, with a change of -30.0% as given. Liquidity and the Z-score give a sound picture, but the absence of debt and interest data means the leverage side of the balance sheet cannot be confirmed from this analysis.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 156.5% on a trailing basis and 163.3% over five years, and by a negative accrual ratio of -9.9%, which means cash earnings exceed reported earnings. Stock-based compensation is 12.7% of revenue, leaving free cash flow after it at 3.25 billion USD, which is a material cost to shareholders. The share count has grown at 0.96% a year over five years, so there are no net buybacks. The Piotroski score is 5 out of 8 evaluable tests. The Beneish M-score is not available. The company beat earnings estimates in four of the last eight quarters and missed in three, with an average surprise of 3.4%. Analysts have raised the current-year estimate by 5.3% over ninety days and the next-year estimate by 3.1%, with seven upward revisions against one downward in the last thirty days for the current year.

Profitability

Profitability is green. The gross margin is 78.5% against a ten-year median of 76.3%, the operating margin 22.6% against 7.2%, and the net margin 23.0% against a median of -0.5%. Operating margin stability is 10.96 on the reported measure. The five-year median ROIC is 16.2% against a WACC of 11.23%, so the business has earned a return above its cost of capital over that period. The trailing ROIC is not available, so the trailing gap between ROIC and WACC cannot be stated. Return on equity is 34.4% on a trailing basis. The DuPont split shows a net margin of 20.4%, an asset turnover of 0.55 and an equity multiplier of 2.71 as of the end of 2025, so leverage contributes to the return on equity, though not decisively.

Growth

Growth is green. Revenue has compounded at 13.6% over three years and 29.5% over five years. The ten-year revenue growth is not available. Earnings per share compounded at 13.1% over three years and free cash flow per share at 14.2%. Revenue grew in seven of the eight comparable years. The consensus estimate for next year's earnings growth is 12.9%, which is close to the three-year pace. The five-year rate of 29.5% is well above the three-year rate of 13.6%, so the recent pace is much slower than the earlier one.

Valuation

Valuation is green, based on the verdict of undervalued. The price to earnings ratio is 25.2x against a historical median that is not available, with four data points. Price to free cash flow is 16.1x against a median of 26.0x, a premium of -38.2%, price to sales is 5.8x against 10.4x, a premium of -44.5%, and price to book is 8.7x against 14.2x, a premium of -39.1%. The DCF gives 225.98 USD per share at a discount rate of 11.23%, with growth of 20% for the first stage and 2.5% in perpetuity. Its terminal value accounts for 53.5% of the total, so the DCF must be read with caution. The fair value band is an order of magnitude built on fixed assumptions, including a 5% equity risk premium and capped growth, and it is not a price target. The fair value from historical multiples is 312.10 USD. The company pays no dividend.

Risks

The main risk is that growth falls short of the 13.1% the price implies, and the five-year pace of 29.5% is not repeated. A slowdown would weaken the case that the shares are undervalued, and the cash flows underpinning the DCF would be lower. A return of operating margins towards their ten-year median of 7.2% from 22.6% would cut the cash generated per unit of revenue. Stock-based compensation at 12.7% of revenue reduces the free cash flow that shareholders keep, and the Piotroski score of 5 out of 8 points to weakness in some tests. The Beneish M-score, trailing ROIC, interest coverage, net debt to EBITDA and the debt to equity ratio are not available. This analysis has no debt maturity schedule and no revenue by segment, so it cannot judge refinancing needs or which parts of the business drive growth.