Airbnb is a company based in San Francisco, California that operates an online marketplace where people can book short-term home stays or experiences. The company works as a broker between home owners and guests, earning a commission from each booking. The company was founded in 2008 by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia.
Airbnb has seen its stock drop about 9% over the past month, and is tracking the decline of the Nasdaq-100. The drop is being attributed to mounting concerns about the U.S. economy, as GDP growth has slowed in the last two quarters. In addition, the Federal Reserve has continued to raise interest rates, raising them by 0.75% last week. These worries about the economy have affected Airbnb stock, which has been highly correlated to discretionary spending.
As a result, Airbnb’s valuation has declined significantly. In early 2021, it traded at 40 times trailing revenue, but that figure is now in the high single digits. The low valuation does not make Airbnb a cheap stock, but Clarke says the stock is no longer a deal breaker for value investors. His target price of $143 implies a 28% upside from Wednesday’s close.
Airbnb has a $150 billion addressable market. It also offers unique inventory of listings and does not need to spend billions on property maintenance. The company’s management is also pouring capital into marketing and new features to build brand awareness and attract more users. This strategy will pay off over time as the company’s business grows.
You may have missed the Airbnb IPO but it’s not too late to get in on the action. Buying stock after the IPO starts is a great idea. The shares of Airbnb are expected to rise over the next decade, which is a good time to invest in the company. But, before you do, be sure to perform your due diligence.
The rise of commission-free brokers has made it much easier to buy Airbnb stock. With its incredibly successful network of home rentals, the company is well-positioned for growth. Airbnb is a disruptive company that has transformed the accommodation industry. And thanks to a scalable asset-light business model, it can grow rapidly. With 6 million listings and a network effect, it can generate huge numbers of bookings per year. This growth has led to a seven-fold increase in revenues in five years.
Airbnb reported its second-quarter earnings on Aug. 2, 2019. It reported net profits of 56 cents per share, compared to a net loss of 11 cents a year ago. Despite a decline of $68 million in Q2 2017, Airbnb is now profitable on a trailing basis, which is good news for investors. In addition, the company is expected to announce its third-quarter earnings after the close on Nov. 1.
As far as the IPO price goes, the company plans to hold a roadshow with investors in December to determine if it’s a viable investment. Once the IPO is announced, it will likely be priced at or below its IPO price. Its price will be based on the market’s reaction to the IPO. If investors are interested in Airbnb stock, it’s best to open a free account with an online brokerage.
