This post was last updated on May 15th, 2020 at 06:29 pm
Airbnb IPO, Buy or Bye?
An IPO, or initial public offering, is an important time for any company, and causes everyone to consider whether or not they are ready to be listed on the New York Stock Exchange. In Airbnb’s case it is one of the highest valuated companies pre-IPO. Now, this could signal that Airbnb will continue to do so well and an Airbnb IPO would be incredibly lucrative to invest in, or, given the recent statistics in the wake of the current pandemic, it could mean that it has been valuated too high or will drop once listed.
What is Airbnb?
Airbnb is a mobile application that allows homeowners, renters, and landlords to offer their residences to temporary renters on a nightly or weekly basis with no long-term contracts. Much like a hotel, however, typically less expensive, fancier, or in a better location. Many people who list their residences on Airbnb are able to pay their mortgages, rent, and any other fees associated with that property through the daily or weekly bookings of potential clients. Customers of this app love that they can book these makeshift hotel rooms in the exact area they want for as many people as they want and still get a good deal. It is a mutually beneficial deal for both the renter and owner.
Airbnb IPO Could Compete with Large Hotel Chains
Airbnb will need to be able to compete with large hotel chains such as Marriott and Hilton in order to succeed after an IPO. Airbnb has shown time and time again that it is ready and able to compete with these larger hotel chains. The frequent users of Airbnb often feel more comfortable staying in someone’s residence than at a hotel. It could signal the end of the modern hotel as we know it. But, as with all companies who have only been around for a few years it is difficult to tell whether or not this is simply a fad or if Airbnb’s earnings, customer base, and newness will continue.
Airbnb IPO During a Pandemic?
In the middle of a pandemic where most entertainment spots including hotels, amusement parks, and tourist attractions are shut down, it is difficult to see into the future and decide whether or not purchasing a stock in the hospitality industry is a wise decision. The likelihood that during the middle of a pandemic a hospitality-based stock would list on the market and hold its IPO is very low. It is important to know that this likely means after the pandemic, and once profits are stabilized for Airbnb yet again, they will list on the New York Stock Exchange. This will quench any concerns about this stock during pandemic, however, it may ignite new issues about travel and entertainment in a post-pandemic world.
Should You Buy Stock in Airbnb if they List?
Airbnb has shown over its 12 years of existence that it is a true competitor with large hotel chains and can hold its own in a market filled with many smaller hotel chains. The market will stabilize for all hospitality and entertainment stocks, and attractions will begin opening again, this is not the end of the world. Once things re-stabilize and Airbnb holds its IPO, it is the opinion of this writer that it is a stock that you will want to buy due simply to the fact that it is as popular as any other hotel brand and it has little to no competition in terms of other companies who offer the same.
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