Short Trade Idea
Enter your short position between $134.70 (the lower band of its horizontal support zone) and $139.47 (the upper band of its horizontal support zone).
Market Index Analysis
- Airbnb (ABNB) is a member of the NASDAQ 100 and the S&P 500.
- Both indices trade inside bearish chart patterns with fading bullish volumes.
- The Bull Bear Power Indicator of the NASDAQ 100 turned bullish but remains below its descending trendline.
Market Sentiment Analysis
Equity futures are red to start the morning, after a three-day rally led by AI names. Today’s market-moving data includes a first look at the third-quarter GDP and updates on the PCE price index for July, August, and September. Geopolitical tensions continue to drive gold and silver prices higher, as tension with Venezuela mirrors a proxy fight with China. The US economy remains in an obvious cool-down period, as evidenced by a cooling labor market, and questions over last week’s weak inflation data hang over markets.
Airbnb Fundamental Analysis
Airbnb is the best-known online marketplace and broker for short-term rentals and short-term homestays. Despite its permanent ban on parties and events, the company continues to face stiff opposition to its properties in core markets. Still, it has announced plans to become an Everything App powered by AI.
So, why am I bearish on ABNB despite its solid rally?
The current rally ignores medium-term risks, such as an expected earnings-per-share contraction of nearly 10% in its current quarter. The short-term rental market faces ongoing challenges, and the price-to-book and P/E ratios suggest the share price is overvalued. While the 5-year negative return on equity is a minor concern, I am worried about the changing regulatory landscape and remain cautious heading into its next earnings call.
Airbnb Fundamental Analysis Snapshot
The price-to-earnings (P/E) ratio of 32.61 makes ABNB an expensive stock. By comparison, the P/E ratio for the NASDAQ 100 is 34.49.
The average analyst price target for ABNB is $140.23. It suggests negligible upside potential with heightened downside risk.
Airbnb Technical Analysis
Today’s ABNB Signal
Airbnb Price Chart
- The ABNB D1 chart shows price action inside a horizontal resistance zone.
- It also shows price action eclipsing its ascending Fibonacci Retracement Fan.
- The Bull Bear Power Indicator is bullish with a negative divergence.
- The average bullish and bearish trading volumes over the past six weeks are nearly identical.
- ABNB rallied with the NASDAQ 100, a bullish confirmation, but breakdown risks have risen.
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My Call on Airbnb
I am taking a short position in ABNB between $134.70 and $139.47. I remain bearish on its expected EPS contraction, current valuations, and regulatory challenges.
- ABNB Entry Level: Between $134.70 and $139.47
- ABNB Take Profit: Between $110.81 and $116.32
- ABNB Stop Loss: Between $143.30 and $147.60
- Risk/Reward Ratio: 2.78
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