The short term renting service Airbnb Inc. (ABNB) went public this month. The stock of the firm quickly peaked at $165. Later, however, the stock started to exhibit fluctuations and it rose for several days before starting a down trend.
The instability of Airbnb shares can be clarified by the absence of a definitive response, at least in the medium term, about the company’s prospects. Presently, the market for rental apartments and hotels is minimal due to social constraints. Although the second wave of the pandemic is in full swing, dreaming about the resumption of tourism activity is premature. Consequently, Airbnb’s present business situation is adverse.
However, as the global economy continues to rebound, investors who are focused on the long term expect of Airbnb to expand. News about the production of a successful vaccine against COVID-19 and its acceptance by a growing number of countries reinforces the confidence of long-term investors.
The travel ban is expected to be lifted by widespread vaccination and to become a catalyst of the tourism industry. Furthermore, Wall Street analysts claim that many prospective visitors saved money during the stay at home measures that can be spent on travel later. Thus, some investors claim that, as soon as the pandemic goes down, high traffic will return to Airbnb and restriction on travel will be lifted. Investors were expected to assume that ABNB shares were worth investing long before the holiday season starts and the travel industry recovers, but the uncertainty and introduction of new lockdown measures in several U.S. states impacted adversely. Resultantly the stock, over the past week, dropped more than 7 percent.
Airbnb, Inc. (ABNB) was up +0.67% to $150 and the overall gain since its listing on the stock exchange as publically traded company is above at 3.66 percent which places its market capitalization just above $92 billion.