Are you looking to buy Airbnb stock? Considering Airbnb recently sold common stock at a price that values them at $35 billion, I am, and so are a lot of others. With what is happening with the Coronavirus, it might be a good time for Airbnb to IPO (once the epidemic has passed).
To say investors are chomping at the bit to reserve a room in this home-rental company would be an understatement at best.
But it's not as simple as you think. With this in mind, we thought a blog post on how to get a piece of this industry giant would be helpful. So lets get to it.
What Is the Stock Name for Airbnb?
- Right now Airbnb is a private company. As a result, there's no Airbnb stock price. But there's good news. Rumor has it that some time in 2020 Airbnb will become a publicly traded company. As a result, you'll be able to trade Airbnb stock on the major indexes. As the saying goes, buy the rumor sell the news. Hopefully we'll be able to do that sooner rather than later with Airbnb. Stay tuned because you can bet we will be trading it when it goes public.
1. Airbnb's Humble Beginnings
Airbnb was founded twelve years ago by Brian Chesky, Joe Gebbia, and Nate Blecharczyk.
Their motive was to create a house-sharing service that gave travelers cheaper accommodation. Furthermore, it allowed homeowners to make more money from their homes. To a large extent, and I think you would agree, it's a win-win all around.
A significant selling feature of Airbnb is the amenities that you can't find at hotels - think inflatable hot tubs, electric car charging stations, bike racks and the bike, full kitchen/office, you get the point.
2. Airbnb's Global Reach
With 4 million unique rental listings in over 191 countries, the global reach of Airbnb is vast. And their reach continues as they expand into some of the world's biggest cities.
Take, for example, usage in England, Birmingham, and Mexico City. In 2018, usage skyrocketed from 70% to 79% while stays in Beijing increased by 90%.
With a business model like that, it's hard to think Airbnb stock would suffer. In fact, we could stream in our live trading room from an Airbnb.
3. Airbnb Gives Travelers Options
Curious to know what it's like to stay in a tent? What about a castle? Bamboo tent anyone? Airbnb doesn't discriminate; you'll see listings that range from cozy homes to houses in trees.
Along the same token, people love Airbnb because their rates are relatively cheap. Depending on your standards, you can stay in the U.S., U.K., and Athens for as low as $14 a night. Now I can't guarantee you won't be sleeping on an air mattress, but it beats $300 a night.
Personally, I am a user and a fan of Airbnb. Likewise, my most recent use was last fall in Austin for the Austin City Limits concert.
Even though our host was present at the house during our stay (that can happen if you don't read the fine print), we had a blast.
Similarly, we quite enjoyed his company, and the house was huge, new and affordable! All things considered, it was a win on both sides.
And if you want to learn more about trading options and not just having options for Airbnb, then check out our free online trading courses. Then you can trade Airbnb stock properly.
4. Airbnb Fun Facts
- Some Top Hosts on Airbnb can make up to six figures per year
- The "air" in Airbnb was due to Brian Chesky and his roommates renting an air mattress on the living room floor
- On average, the price per night for reservations is $80
- The fastest-growing Airbnb hosts are seniors.
- Senior women over 60 years are some of the best hosts on Airbnb.
- About 100,000+ guests stay in earth houses.
What Is Airbnb Stock Worth and How Can I Buy It?
- Disappointingly, since Airbnb is not publicly listed, you can't buy shares in them. Ergo, Airbnb stock isn't worth anything yet. Although it seems this will change sometime in 2020 when they go public. At that time, you will be able to purchase shares. But, I think you'll need to act quickly to get in on the float. However, after listing, you will likely find it easy to buy shares. Until then, all you can do is book a room and have a vacation!
1. Two Ways to Buy Airbnb Stock
Like I mentioned in other posts, some platforms allow investors to invest in pre-IPO companies. To put it another way, if an existing shareholder wants to sell some of their shares, they can do it via those marketplaces.
Usually, the stock price is the same as the one used in the latest round of investment. For Airbnb, it's about $125.
In contrast, another possibility is to invest in a private equity fund that invests in companies like Airbnb in venture capital rounds. Both AngelList and EquityZen are funds that allow investors to diversify their investments in pre-IPO companies.
That's all good, but these private equity funds typically require investors to be high-net-worth individuals. If you'd like a list of penny stocks to trade until Airbnb stock is available, then click here.
2. Is Airbnb Profitable?
According to TechCrunch, in 2018, Airbnb had over $1 billion in revenue. Fast forward to Q1 of 2019, and their financials showed the company increased its booking value by 31%.
According to Reuters, this translated into a $9.4 billion increase in comparison to 2018. Predictions from Forbes pegged that by 2020, Airbnb's profit could be around $8.5 billion.
But, that's no longer the case; Airbnb has a profit problem. Would that effect Airbnb stock if it were available to trade?
According to the Wall Street Journal, this home-rental giant posted a loss of $322 million in the first nine months of 2019.
Rewind to the same period in 2018, where they had a profit of $200 million. Fortunately, they did manage to turn a profit in the third quarter of 2019, albeit lower than Q3 of 2018.
3. Why Is Airbnb Losing Money?
For a lot of reasons.
For starters, Airbnb has had some recent significant expenses due to safety concerns. Everything from prostitution, gun violence to racism has eaten into Airbnb's once profitable bottom line.
An investigation by Vice revealed a nationwide scam by Airbnb hosts. When guests would show up, hosts would switch their housing last minute to inferior properties, claiming the ones they initially booked weren't available.
To solve these issues, Airbnb committed $150 on various safety initiatives, including the verification of its 7 million listings for accuracy. Furthermore, they created a 24/7 safety hotline and a "manual screening of high-risk reservations.
Secondly, Airbnb has made a few high-profile acquisitions. Recently, they acquired the hotel booking site, HotelTonight, as well as Urbandoor. Because of this, Airbnb is poised to gain a foothold as a full-fledged travel company, rather than a just a home-sharing service.
Due to all of this, Airbnb is looking at a whole lot of red. In fact, Airbnb is one of the numerous tech companies hitting the public markets without being profitable - think Lyft.
However, all is not lost. It's important to remember that just because they are outlying a lot of capital now a company doesn't mean the profits won't continue. And in the case of Airbnb stock, I see this as just a growing pain.
4. Airbnb Still Has Cash in the Bank
Since its inception and up until 2019, Airbnb has raised an astonishing $4.4 billion. Out of that $4.4 billion, they still had close to $3.5 billion in the bank.
Coupled with the fact that they raised $1 billion in their last round of funding, Airbnb's cash reserves are extremely healthy.
All things considered, Airbnb generates healthy amounts of cash flow. And once COVID-19 washes over us and travel resumes, Airbnb is a company poised to stand the test of time. You can bet we will be watching it in our trading room when the IPO goes live.
5. Eager Anticipation of the Initial Public Offering (IPO) for Airbnb Stock
The Airbnb IPO is a promising tech "unicorn" expected to go public in 2020. Many expected the company to go public last year, like many of its tech peers did, including Uber, Lyft, Zoom, and Pinterest.
For whatever reasons, they chose not to, instead indicating they would file for an IPO in 2020. Unfortunately, they did not give a specific timeline for this much-anticipated event, which leaves many investors holding their breath. In the meantime, we can only watch and see what happens. Let's hope the coronavirus scare ends soon and people get back to renting properties...which will inevitably lead to Airbnb getting it's momentum going to launch the IPO.
Airbnb Stock Closing Thoughts
There is no telling what the Airbnb stock will be come IPO time. But that is no reason why you can't get started trading now. And nothing is more important to us than giving you clarity during a time of so much chaos.
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