SHOULD YOU BUY AIRBNB STOCK?



With Airbnb pulling back ever so slightly since reaching a market cap of $100B, I’m beginning to reconsider the stock! Here are my pro’s and con’s πŸ‘‡


⚑ WHY I'M INTERESTED


Airbnb is disrupting the holiday rental industry (Reported to be worth around $1 Trillion) and has quickly become one of the π—Ÿπ—˜π—”π——π—˜π—₯𝗦 in this sector! Airbnb's reported revenue and customer growth also suggests that they will continue to π—šπ—”π—œπ—‘ 𝗠𝗔π—₯π—žπ—˜π—§ 𝗦𝗛𝗔π—₯π—˜ from their peers.


It’s not just the holiday and hotel sector that Airbnb is going after! As international travel stopped because of the pandemic, Airbnb has accelerated it’s push into "π—Ÿπ—’π—‘π—š-π—§π—˜π—₯𝗠 𝗦𝗧𝗔𝗬𝗦". This category connects users with accommodation that is available for 1-3 months and moves Airbnb a step closer to disrupting the traditional π—›π—’π— π—˜ π—₯π—˜π—‘π—§π—”π—Ÿ 𝗠𝗔π—₯π—žπ—˜π—§!

With estate agents ripe for replacement, I think that Airbnb has an π—˜π—‘π—’π—₯𝗠𝗒𝗨𝗦 𝗒𝗣𝗣𝗒π—₯π—§π—¨π—‘π—œπ—§π—¬ to dramatically increase its total addressable market by expanding on it’s short term travel offering with long term property rentals.

Lastly, Airbnb is increasingly adding more services to its platform beyond merely a place to stay! The company is transforming its platform into an π—˜π—‘π—§π—œπ—₯π—˜ 𝗠𝗔π—₯π—žπ—˜π—§π—£π—Ÿπ—”π—–π—˜ where customers can now book local tours, events, restaurants & more!



⚑ WHY I'M CONCERNED


Despite a valuation of $18bn in their last funding round, Airbnb announced that they would be pricing shares between $44-50. This gave the company a market cap of $26-30 billion which seemed like a π—šπ—’π—’π—— 𝗒𝗣𝗣𝗒π—₯π—§π—¨π—‘π—œπ—§π—¬ for investors. Unfortunately, the stock eventually opened up at $146... 3 times that π—œπ—‘π—œπ—§π—œπ—”π—Ÿ π—©π—”π—Ÿπ—¨π—”π—§π—œπ—’π—‘ and quickly reached a $100b market cap. Other tech IPO's also performed well this year πŸ‘‡



Airbnb now has the same market cap as competitor Booking.com despite turning over and earning 𝗔 𝗙π—₯π—”π—–π—§π—œπ—’π—‘ of their larger rival. Although I think Airbnb could 1 day surpass its competitor, the price of both stocks seem to already reflect this. Also, as much as I love Airbnb (I’ve used the platform for almost 10 years now), I’m not 100% certain that they are safe from their π—₯π—œπ—©π—”π—Ÿπ—¦.

I have seen a clear improvement in the likes of Booking.com (BKNG) recently and it’s clear that they are pivoting in a bid to π—˜π— π—¨π—Ÿπ—”π—§π—˜ Airbnb’s business model. This attempt may be futile in much the same way retailers were 𝗧𝗒𝗒 π—Ÿπ—”π—§π—˜


to respond to Amazon. Yet, there’s a chance that Booking will do to Airbnb what FB has done to competing social media platforms… Copy them, then use their superior finances & network to 𝗖π—₯𝗨𝗦𝗛 π—§π—›π—˜ π—–π—’π— π—£π—˜π—§π—œπ—§π—œπ—’π—‘. Airbnb is now big enough that I doubt their rivals can "crush" them, however we will soon see how big Airbnb's moat really is.


Lastly, not only is Airbnb very pricey compared to their industry peers, the stock is very π—˜π—«π—£π—˜π—‘π—¦π—œπ—©π—˜ full stop! In fact, only Snowflake, Lemonade & Virgin Galactic are more expensive than Airbnb on a 𝗣π—₯π—œπ—–π—˜-𝗧𝗒-π—¦π—”π—Ÿπ—˜π—¦ π—₯π—”π—§π—œπ—’ (as seen below).



Not only that, but these 3 companies are growing their revenue between 4-10x faster than Airbnb. Therefore, if all 4 of these stocks perform similarly over the next couple of years, Airbnb could well become the most π—’π—©π—˜π—₯-𝗣π—₯π—œπ—–π—˜π—— stock on the market. That’s the kind of title that can spark a huge sell-off… And if it does π—œ'π—Ÿπ—Ÿ π—•π—˜ π—ͺπ—”π—œπ—§π—œπ—‘π—š.





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Disclaimer: All trading involves risk. Only invest money that you can afford to lose and remember that past performance doesn’t necessarily guarantee future results. Everything posted by me is for educational purposes only. I am not a financial advisor and no information on this website or any accounts linked with myself should be considered as financial advice. Remember, all trades are at your own risk. 

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