Airbnb (ABNB) stock falls as Morgan Stanley cuts to Underweight, sees risk of bear case playing out

Shares of Airbnb (NASDAQ: ABNB) are down about 3.5% in pre-open Wednesday after Morgan Stanley analyst Brian Nowak cut the rating to Underweight from Equal Weight. The analyst’s new price target of $80 per share implies a downside risk of 14% relative to yesterday’s closing price.

Nowak decided to downgrade Airbnb stock after the firm’s deep dive analysis yielded severan concerns, including listings growth, occupancy headwinds, and lower room night demand.

“ABNB's required forward supply has been a key debate since IPO and our new supply and occupancy deep dive speaks to budding growth headwinds,” Nowak wrote in a client note.

As a result, Nowak cut estimates “significantly” to reflect these risks, which are not that well understood by the Street. Morgan Stanley now sits between 10% and 20% below Street on EBITDA. Nowak also sees the “above average risk” of a bear case playing out for Airbnb, which would push the price toward $60 per share.

“Our model for decelerating supply speaks to how it is increasingly important for ABNB to drive demand growth through higher occupancy and/or more nights available per listing,” Nowak added.

Airbnb stock is down 44% year-to-date (YTD).

By Senad Karaahmetovic

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