Should You Buy Airbnb Stock Before May 13?

For years, Airbnb (NASDAQ: ABNB) has been teasing the idea of expanding the business "beyond the core."

The home-sharing marketplace is now set to unveil its first big initiative on that front on May 13 as the company said in its first-quarter shareholder letter that it would "go beyond places to stay."

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The company didn't divulge any details about what the launch would include, but observers can speculate based on previous comments from management as well as ancillary businesses that would fit in well with the home-sharing platform.

Image source: Airbnb.

Where will Airbnb go beyond the core?

Airbnb is known for homestays, but it's not the company's only business. It launched its Experiences platform in 2016, which operates with same principles as home-sharing.

Just as anyone can list a place to stay on Airbnb, anyone can offer an experience, which could include a local tour, a home-cooked meal, some other food or beverage experience, or a photographer-for-hire.

Experiences make sense as a complement for stays, but the business never seemed to reach a critical mass. Relaunching it could help build experiences as a business that can move the needle for Airbnb, and enhance the overall platform.

After all, travelers, especially those staying at an Airbnb, are likely to be interested in locally hosted experiences that you can't find anywhere else.

Another way Airbnb could expand is with host services. For example, many Airbnb hosts rely on professional cleaners to clean their homes between guests and help get them ready. However, Airbnb provides no assistance in finding house cleaners, nor does it give service providers looking for business a way to connect with Airbnb hosts.

Adding a marketplace for service providers, which could also include things like handyman, landscapers, locksmiths, plumbers or electricians, in addition to cleaners, would both provide a benefit for Airbnb and act as another revenue stream as Airbnb could monetize those interactions the way it does with homestays.

Finally, advertising also presents an opportunity for additional revenue as nearly every major internet marketplace, including Amazon, Uber, and rival Booking Holdings. Airbnb would certainly be an attractive platform for advertisers, which could include airlines, tour operates, or local entertainment.

Airbnb also does not have loyalty program, which some customers and investors have requested. That could be another addition that helps grow the customer base an increase frequency.

Airbnb could use some help

Airbnb's competitive advantages are self-evident as it's the leading home-sharing platform and it essentially invented the industry.

However, the stock has underperformed since its IPO in 2020, and its revenue growth has steadily slowed, coming in at just 6% in the first quarter. Profitability also went down to investments in new businesses, and the company reported softness in the U.S. market.

Based on the numbers, Airbnb's business seems to be maturing so expanding to related businesses and tapping its large user base makes sense.

Should you buy the stock before May 13?

Despite its slowing revenue growth, Airbnb's valuation looks attractive, especially on a free cash flow basis as it currently trades at less than 18 times free cash flow.

Looking ahead to the announcement on May 13, there's no rush to buy Airbnb stock as the business impacts will play out over the next year and beyond. However, the event could be the catalyst that Airbnb investors have been looking for to drive the next leg up in the stock and accelerate growth.

Investors should keep an eye on the macro climate as well, but the Airbnb platform has a lot of potential for growth and monetization beyond conventional homestays, and it makes sense for Airbnb to begin to unlock.

Stay tuned as the announcement will be the clearest sign yet of where Airbnb is headed over the coming years.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Airbnb and Amazon. The Motley Fool has positions in and recommends Airbnb, Amazon, Booking Holdings, and Uber Technologies. The Motley Fool has a disclosure policy.