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Should You Invest In Airbnb Inc?
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2,969,457 Airbnb Inc positions opened on eToro
197.41 0.63%
155.71 1.93%
597.57 0.2%
53.76 0%
Airbnb: what every investor needs to know
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Read more about Airbnb Inc
What is Airbnb?
Airbnb is a service that allows individuals to rent out their spare living spaces to travellers for a fee. The company was founded in 2007 and has become an extremely popular service, used by millions around the world. Airbnb has become a symbol of the sharing economy and was one of the major disruptors of the travel industry. The company went public in December 2020, on the Nasdaq exchange.
How COVID-19 affected Airbnb’s IPO
2020’s coronavirus pandemic put the tourism industry on hold, as thousands of restaurants, museums, airports, and hotels worldwide were left with very few visitors due to the global lockdown, and Airbnb was no different.
Prior to the pandemic, the company was estimated to be worth as much as $42 billion. In fact, it was doing so well that it planned to go public through a direct listing, and not through the more common initial public offering (IPO), because it did not need to raise any more money; it just wanted employees to utilise their soon-to-be-expired stock options, and its investors to capitalise on their investments.
However, around mid-March of that year, the company’s bookings started to drop due to the coronavirus pandemic. Not long after, the company’s CEO, Brian Chesky was crying at a video conference as he was forced to let go of a quarter of his workforce (approximately 1,900 employees). With the massive decrease in tourism, the company’s value was more than slashed in half, reducing its worth to $18 billion. The company’s revenues were also halved.
This was because in order to cope with the sudden drop in revenue, the company took on $2 billion in debt and saw its valuation shrink to $18 billion as part of the debt financing arrangement. However, as the global lockdowns eased, a growing number of travellers began to book homes instead of hotels, helping Airbnb gain profit for 2020’s third quarter, boosting its value to somewhere around $39-$42 billion.
The story behind Airbnb
The idea behind Airbnb started to take shape in 2007, after Joe Gebbia and Brian Chesky, two roommates and friends who met at Rhode Island School of Design, decided to rent space in their San Francisco loft apartment for $80 a night.
A designer’s convention was taking place and there was a noticeable shortage in hotel rooms. Gebbia and Chesky needed some extra cash to pay their rent and thought that renting out space in their loft, on an air mattress, with free wifi and a free breakfast each morning could be a good idea. They created a website called airbedandbreakfast.com and hosted their first three guests. After that experience, Gebbia and Chesky realised they had a great idea on their hands. They reached out to their old roommate, Nathan Blecharczyk, a technical architect and Harvard graduate, and he became the third co-founder.
It took a while to get people on board with the Airbnb idea. It did not have much success at first.
The trio upgraded the site and relaunched it right before the 2008 Democratic National Convention in Denver, thinking strategically about the fact that hotel rooms would be hard to find and people would need a place to stay. They were right. Thousands of people registered through their site, and “Air Bed and Breakfast” finally started to take off.
In March 2009, they officially changed their name to Airbnb. By 2011, Airbnb was in 89 countries and had crossed the 1 million bookings milestone. Eventually, the company was considered the most well-known travel site in the world, as it was operating in more than 220 countries and had over seven million listings.
Who owns Airbnb?
Prior to its IPO, Airbnb was primarily held by its three founders, who operate under different roles in the company:
Co-founder Brian Chesky, whose net worth was estimated at over $3 billion before the IPO, claimed to still be living in the Airbnb apartment the trio used to rent before making it big. He served as Airbnb’s Head of Community, and the company’s CEO.
Co-founder Joe Gebbia was the company’s Design Studio Manager. He also operated Airbnb’s future-orientated product and development team.
Co-founder Nathan Blecharczyk was a young entrepreneur before becoming one of Airbnb’s co-founders. He ran a business while he was in high school, and had clients in over 20 countries. Therefore, he played a leading role in driving key strategic initiatives across the company’s global business. He served as the Chief Strategy Officer, and Chairman of Airbnb China.
The risks involved in buying Airbnb stocks
Before purchasing abnb shares, you should consider a few things:
The company has a lot of well-established competitors in the travel industry, with some that provide the same service as Airbnb, but without the guest fees, which reportedly entices visitors to stay longer in the space they are renting. Also, many competitors offer both hotels and home-sharing options, while Airbnb is considered mostly a home sharing app, with relatively few hotels.
The company is heavily regulated in cities that are considered to be major tourist attractions, such as Las Vegas, Los Angeles, and New York. In these cities, the law limits the number of days a host can rent out their home. Other cities such as Barcelona limit the number of Airbnb rentals that are allowed in the city. In fact, some cities have gone public with their negative opinion of the housing app. One example is New York City Council Speaker Corey Johnson, who said he believes that the rise of house pricing in NYC is due to Airbnb. Representatives of other cities such as New Orleans, New York and even Paris have complained that entire neighborhoods are being affected by the number of tourists who are invading their cities and their culture due to Airbnb.
How to buy Airbnb shares?
If you are interested in investing in abnb shares, you can do so by downloading eToro’s trading platform and following these steps:
Go to the Airbnb stock page on eToro.
Click on “Trade.”
Choose whether you are going long (BUY) or short (SELL).
Set your desired leverage, Stop Loss and Take Profit points. Reminder: Non-leveraged, long positions have 0% commission on eToro.
Click on “Open Trade.”
The above applies to registered eToro users. To open an account, follow Airbnb and other IPOs. In order to invest in financial markets, click the button below.
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