During the previous financial crisis, in 2008, a large number of startups were born. Some of those startups have turned into unicorns, i.e., valued at over $1 billion. Some of the names that popped up in that period include Uber, Slack, Cloudflare, Pinterest, Square, Twilio, and Airbnb. Airbnb is perhaps one of the most prominent names on that list. Because of that, investors started to wonder about how to buy Airbnb stock.
But is it possible to buy Airbnb stock? If so, are there any concerns about investing in Airbnb? In this blog post, we will go over all things Airbnb, including what’s so special about the company and any concerns potential investors should be aware of.
What Is Airbnb?
Airbnb is an online community marketplace for people to list, discover, and book accommodations around the world. The company was founded in 2008 amid the financial crisis and quickly grew in popularity, eventually completely disrupting the hospitality sector.
Airbnb connects travelers seeking authentic experiences and places to stay in with hosts offering unique, inspiring spaces around the world.
As of September 30, 2020, Airbnb reportedly has 5.6 million listings worldwide in more than 100,000 cities around the world.
What’s So Special About Airbnb?
There were a lot of very positive indicators on Airbnb’s performance before the pandemic hit in early 2020.
Airbnb has raised $5.8 billion across 10 funding rounds since its inception up until April 2020. The company was valued at $31 billion before the pandemic, but its valuation in April reportedly fell to only $18 billion.
Airbnb’s cash reserves were extremely healthy before the COVID-19 crisis. Out of the $4.6 billion they raised until that point, in 2019, they still held around $3,5 billion in the bank. Unlike other companies like Uber, Airbnb generated a very healthy amount of cash flow. In fact, they have reportedly been profitable in 2017 and 2018, as measured by earnings before interest, taxes, depreciation, and amortization EBITDA). Besides that, revenue kept on growing at a rapid pace. Airbnb has reportedly grown its revenue by 40% in 2018 and 30% in Q1 2019.
In April 2020, they have raised a further $1 billion in a debt and equity deal with Silver Lake and Sixth Street Partners. Although it’s unclear what this latest round of funding is for, it might be due to the impact of the COVID-19 pandemic on Airbnb’s revenue.
Since then, and due to the continuous impact of COVID-19, the company has been forced to lay off 25% of its staff in May 2020 in order to get through this crisis. It has also halted investments in hotels, transportation and luxury stays for now, in order to control costs during these difficult economic times.
Hopefully, when the economy recovers, Airbnb can start looking forward and re-activating some of the projects on hold.
One of the most promising projects that had to be put on hold is expanding into the transportation industry. Before this crisis, Airbnb hired veteran airline industry executive Fred Reid as its global head of transportation. Fred is the former CEO of Virgin America and will act as Chief Transportation Officer for Airbnb. What this means is that Airbnb can at some point start adding transportation options to its bookings. This move means that Airbnb can begin making a dent in the $6 trillion travel industry. If Airbnb succeeds only to take a single-digit percentage point of that market size, it would be enough to value it at 10 times the current value.
How Can I Buy Airbnb Stock?
Airbnb’s IPO was in December 2020, meaning its shares are now available on the stock market under the ticker ABNB.
The company went public at $68 a share, but it debuted in the market at more than $110/share. At the time of this writing, the ABNB stock price was around $177. Given the Covid-19 pandemic and the impact on Airbnb’s business, it’s remarkable how high their price went.
That said, given the healthy financial situation Airbnb is in now, and the potential expansion plans after Covid-19, it’s fair to assume some of that potential growth is being priced in.
Are There Any Concerns About Airbnb?
There are two major concerns right now: regulatory and safety.
The regulatory issue is due to Airbnb’s impact on the traditional rental property market. Since many homeowners make more money on Airbnb than with traditional rent, the number of properties available for traditional rent is reduced. That reduction pushes the rental price of existing properties higher. That, in turn, makes it more difficult for citizens to rent properties.
Airbnb is mitigating the regulatory issue by working alongside regulators to avoid the issues that, for example, Uber faced recently.
Some studies showed that it could be dangerous for hosts to rent their properties on Airbnb in terms of safety. These safety issues have been very few but need to be mitigated nonetheless.
In order to solve this issue, Airbnb has been taking steps to mitigate those problems, which is also encouraging.
If you liked this article and would like to read more like it you can subscribe to our newsletter.
Airbnb is an online community marketplace for people to list, discover, and book accommodations around the world.
There are a lot of very positive indicators of Airbnb. Airbnb has raised $4,4 billion since its inception. Out of those $4,4 billion, in 2019 they still held around $3,5 billion in the bank. Check the article for more details.
In order to buy Airbnb stock, use your stock broker and find the ticker ABNB.
Airbnb’s IPO took place on the 9th of December 2020, and its shares began trading the day after, on the 10th of December.