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Founded in August 2008, Airbnb is an online marketplace for travel information and booking services. The company utilised the concept of the ‘sharing economy’ to revolutionise the travel and lodging industry. Airbnb operates a website and mobile app that lets people list, find and rent short-term accommodation. The company pioneered the peer-to-peer model that has seen over 4 million hosts in over 190 countries share their countries and spaces with travellers worldwide. Like every trailblazer, Airbnb has seen its brand grow substantially with the word ‘Airbnb’ easily recognised and representative of the entire industry, much in the same way as ‘Google’, ‘Zoom’, etc. The company is incorporated in Delaware and headquartered in San Francisco, California.
Airbnb started out as a casual alternative to hotels, offering airbeds and mattresses at affordable rates for short-term stays. But the company has, at the time of writing successfully disrupted the hospitality industry, having welcomed over 900 million guests since inception by mid-2021. The original idea was to offer guests a ‘home away from home’ experience, which ensured that guests gain a more authentic experience than could be offered by hotels, and at much cheaper rates. The company operates a simple, impressive, and highly scalable business model that allows literally anyone to become a host, with Airbnb taking commissions out of money that guests pay.
Although a young company, Airbnb has been an active player in the M&A market. The company has made multiple acquisitions of software and tech hardware companies. The biggest buy to date is the 2019 acquisition of Hotel Tonight for $400 million.
Airbnb went public on 9th December 2020, listing on the Nasdaq Global Select Market, where it trades under the ticker symbol ABNB.
Airbnb Stock History
Airbnb debuted with an IPO price of $68. The stock was an instant hit as it closed at circa $145 after hitting a high of around $165 on its first trading day.
At the time of the IPO, the coronavirus pandemic had hit the hospitality industry, and Airbnb was not immune. But investors backed the company with their money and were not disappointed. ABNB maintained the positive tone and printed an all-time high of circa $215 in mid-February 2021. Concerns about a new Delta variant of the COVID-19 disease as well as a general sell-off of technology stocks then weighed heavily on the stock that trades around the $150-region as of August 2021.
Airbnb does not pay dividends, but its business model classifies the ABNB as a growth stock capable of rewarding investors in the form of high share prices over the long term.
How to Trade ABNB Stock
Here are the factors to consider when trading Airbnb stock:
- Legislative Issues
The Airbnb business model has left the company vulnerable to numerous legal challenges. The company enjoyed tremendous growth due to a lack of clear housing regulations, but many jurisdictions are now drafting or implementing regulations around using private residences for commercial gain. Governments are also seeking to impose tourism taxes on Airbnb hosts, while it is difficult to regulate the conduct or guarantee the safety of millions of guests around the world.
Airbnb’s simple business model has powered its growth, but on the flip side, it has also attracted competition because of its ease of implementation. The company faces competition from a myriad of players such as Vrbo, Flipkey, and Turnkey. Other players, such as Booking.com and Hotels.com, also rank high on search engines and are able to offer compelling offers to travellers and guests. Additionally, competition also comes from established traditional hotels as well as local vacation rentals that can be deemed safer for guests. The company also considers travel agencies as significant threats to their competition.
- Negative PR and Lawsuits
As is expected of a company that has millions of hosts, Airbnb has had its fair share of negative PR and lawsuits. The company has been accused of causing hikes in housing prices and there have been numerous cases of guests receiving bad treatment from hosts. Airbnb has also been adversely mentioned by the United Nations regarding listings in a disputed region between Israel and Palestine. Investors are usually keen on headlines, and negative ones can particularly weigh heavily on ABNB.
- Periodic Earnings
The Airbnb fiscal year runs from January 1st to December 31st, and the company releases periodic earnings reports to update investors on its business performance. Guest numbers, revenues, and future forecasts are some of the important metrics investors watch out for in Airbnb earnings reports. If results exceed expectations, ABNB will tend to drift higher, whereas an earnings miss will pressure the stock lower.
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