Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

After Its IPO, Airbnb Stock Is Hot. Buy Now Or Wait For A Correction?

By Investing.com (Haris Anwar/Investing.com)Stock MarketsDec 14, 2020 09:42AM ET
www.investing.com/analysis/after-its-ipo-airbnb-stock-is-hot-buy-now-or-wait-for-a-correction-200547770
After Its IPO, Airbnb Stock Is Hot. Buy Now Or Wait For A Correction?
By Investing.com (Haris Anwar/Investing.com)   |  Dec 14, 2020 09:42AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Airbnb (NASDAQ:ABNB) went public last week and its debut proved to be a resounding success. Shares of the San Francisco-based vacation rental platform opened at $146, skyrocketing from the IPO price of $68, giving the firm a $100-billion valuation.

ABNB 60-Minute Chart
ABNB 60-Minute Chart

Clearly, this isn’t an ordinary performance for the middle of a devestating pandemic which has decimated the global travel industry and pushed many international firms to the brink of bankruptcy. 

After its eye-popping debut, Airbnb is now worth more than five times the implied post-money valuation of its debt, raised back in April, according to PitchBook. As well, its market capitalization is now more than the combined market values of several of its largest hotel competitors.

This robust demand for Airbnb shares clearly shows that investors have great faith in the company’s business model which, they believe, can withstand one of the harshest operating environments existent for hospitality and travel companies. 

The global pandemic has been challenging for Airbnb, which saw demand for short-term rentals dry up in its busiest and most expensive business hubs. Its revenue fell 18% during the third quarter compared with 2019. That was far less than Marriott International (NASDAQ:MAR), which reported a 57% drop in sales, and online travel agency Expedia Group (NASDAQ:EXPE), whose revenue declined 58%. 

Nonetheless it was still able to perform much better than airlines, hotel brands, and cruise lines by pivoting to a redefined strategy.

Flexible Business Model

After remaining afloat when liquidity dried up last spring, Chief Executive Brian Chesky has quickly shifted his strategy to focus on local stays when travelers began avoiding taking flights during the first wave of the pandemic.

Airbnb’s relative resilience in an historically bad year for the travel industry is a result of a flexible business model that allowed the company to meet customers in the places they wanted to go. That meant city dwellers fleeing to less crowded locations or families and groups looking to vacation close to home.

While these strengths are very much reflected in the success of Airbnb's IPO, the big question for retail investors is whether this is the right time to buy this stock? According to some Wall Street analysts, Airbnb’s journey from here is very much a function of the post-pandemic recovery in the travel industry and how well the company is positioned to benefit from it. 

“They’re going to be figuring out how to make it safe, how to make it convenient and how to make it affordable for everyone who is looking for alternative solutions,” Michael Seibel, partner at Y Combinator, told CNBC last week.

“And then I think the second thing that’s most interesting is that the future of work, as we all are working from home, Airbnb is in the best position to support workers who are now basically able to blur the lines between a one- to two-week vacation rental and a one-year apartment rental. So I think there are a lot of great opportunities ahead.”

Another distinguishing factor for a disruptor like Airbnb is that it’s very popular among millennials, who are the largest group of consumers now, and generation Z (anyone born between 1995 and 2015), which is the future. As Bloomberg analysis put it:

“The company is a brand the new generation of millennial investors grew up using. Such name recognition can help cement the company as the place to go for short-term rentals. It also means Airbnb has to spend a lot less money on advertising, helping profitability.” 

Despite this bright outlook, no business comes without risks. In the case of Airbnb, cities are introducing stricter regulations after a backlash against the platform from long-term residents. And what travel will look like post-pandemic is still just speculation. 

It might take years for normal travel demand to return after the pandemic. Thus, despite the flexible nature of Airbnb’s business model, it might continue to live with fewer trips from business travellers as videoconferencing becomes a norm. 

Bottom Line

We believe Airbnb is a great travel stock to own and should be complementing an existing, balanced portfolio. That said, it’s not advisable to buy a stock right after it experienced IPO euphoria. The smarter strategy is to wait and look for a better entry point.

After Its IPO, Airbnb Stock Is Hot. Buy Now Or Wait For A Correction?
 

Related Articles

After Its IPO, Airbnb Stock Is Hot. Buy Now Or Wait For A Correction?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (11)
Matthew Price
Matthew Price Dec 16, 2020 8:07AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
tanking ship
Sean Glazar
Sean Glazar Dec 15, 2020 2:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Gonna wait until I see their first earnings report
rebecca stone
rebecca stone Dec 14, 2020 3:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
https://www.bancofcoins.com/
rebecca stone
rebecca stone Dec 14, 2020 3:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
https://www.bancofcoins.com/?utm_source=fb&utm_medium=cpc&utm_campaign=group
M Douglas King II
M Douglas King II Dec 14, 2020 1:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
It started at 146 and it's going down steadily... Are we talking about the same stock?
Kings Wales
Kings Wales Dec 14, 2020 1:01PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
heheheh wow buy????? are you guys serious. This is a sell
customer service
customer service Dec 14, 2020 9:18AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
i think its a strong sell
Widlene Leeks
Widlene Leeks Dec 14, 2020 8:54AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Now
Widlene Leeks
Widlene Leeks Dec 14, 2020 8:53AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Should i buy airbnb niw?
Mike Thomas
Texasstockman1 Dec 14, 2020 8:53AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Accirding to article no. However, it could be one of those that declines and then rockets overnight when your not able to buy. Just nees to warch close and be prepared to jump in if news hits indicating there is a strong reason to buy. I will hold what i have and watch for bottom which it may not be yet. GLTA
david sibi
david sibi Dec 14, 2020 7:46AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
how could we buy abnb when it price around 72 times its FC ?!?!!! when booking.com price around 18! i think this stock has touch the collective retail investor way of reflexion... as u i wloud like to go in, even if i have to overpay for it, but at this valuation i am not a PIGEON
Sam Tt
Sam Tt Dec 14, 2020 3:52AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
totally agree, thank you
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email