Get Real Time Here
| Open157.240 | Close160.950 |
| Vol / Avg.3.455M / 4.765M | Mkt Cap103.718B |
| Day Range156.700 - 161.140 | 52 Wk Range103.550 - 170.100 |
Among recent initial public offerings, arguably few organizations have more question marks surrounding it than Airbnb Inc. (NASDAQ: ABNB), the popular online vacation rental marketplace. On one hand, Airbnb stock is poised to perform well on an economic recovery. On the flip side, that recovery is far from guaranteed.
Prior to the pandemic, many investors eagerly awaited the IPO of Airbnb stock. Forwarding a practical example of the sharing economy, a peer-to-peer marketplace where regular people provide services through assets they own, ABNB represented both opportunity and disruption. Suddenly, anyone with a spare room can become a mini hotelier, sending a warning shot to the lodging industry.
However, the COVID-19 virus had some disruption of its own to offer. Ravaging the global economy, high-contact businesses suffered disproportionately from the crisis.
Clearly, this is great news for Airbnb stock. However, everything now rests on the possible economic recovery and consumer willingness to venture out in public.
How to Buy ABNB Stock Summary:
- Pick the right brokerage
- Determine your share count
- Select your order type
- Execute the trade
How to Buy Airbnb Stock
Now that Airbnb stock has passed its market debut and has settled into a rhythm, some of the wildness associated with IPO trades may have faded. However, that doesn’t necessarily mean that ABNB is a safe investment.
Currently, Airbnb trades similar to a momentum stock or a security that harnesses the power of investors’ emotions. You can look at the price chart of ABNB to recognize a defined trend of higher highs and higher lows — a step-up ladder formation.
As you’ve undoubtedly seen from the news with so-called “meme stocks,” momentum and groupthink combined imparts a powerful force on the market. With Airbnb stock, may be buying into the shares as long as the step-up pattern holds up. However, as soon as momentum fades, ABNB is liable to correct as traders exit out of their positions.
This is where the underlying fundamentals become crucial. If benchmark economic data does not confirm the recovery narrative, traders can interpret that as a headwind for ABNB. For instance, without strong consumer confidence, the hospitality industry may experience deflation. Naturally, this will also deflate interest in companies like Airbnb.
To summarize, if you decide to take a shot with Airbnb, you must be prepared for anything! Here's how to buy the stock.
- Pick a brokerage.
Due to the rise of connectivity platforms and increasing consumer expectations for maximum efficiency and convenience, investors today are no longer limited to brick-and-mortar brokerages. Instead, many online brokerage firms offer the same access to markets and investing vehicles as traditional firms.
However, this does not mean all online brokerages are the same. While the topic of best brokers is heavily discussed, you will want to ensure that you find a platform that works best for you. For instance, most online brokers now offer commission-free trading due to rising competition. But some might offer the ability to trade options, while others do not. - Decide how many shares you want.
Before you can participate in the investment narrative of Airbnb, you must know how to buy stocks. While the process takes an adjustment, it becomes second nature almost immediately. You just need to be aware of the language that the market uses.
First, you conduct market transactions not in terms of dollar amount but by the number of shares you wish to purchase. The conversion process here is simple. Take the dollar amount you wish to spend on your desired security and divide that by its price.
For instance, let’s assume that you want to spend $1,000 on Airbnb stock. At time of writing, ABNB trades hands at $195.80. Therefore, you can purchase 5 whole shares ($1,000/$195.80 = 5.107). Please note that some brokers allow you to buy fractional shares, though not every platform offers it. - Choose your order type.
In a retail market setting, you pay the listed price of a product (plus tax). In the stock market, the price almost always fluctuates. Choose your order type based on your preference:
Bid: The bid is the highest price a buyer will pay for a stock and is always lower than the ask.
Ask: In contrast, the ask is the minimum price a seller will accept and is always higher than the bid.
Spread: This is the difference between the bid and ask price. Under a market order (explained below), you will execute an order at the price least favorable to you (buy on the ask, sell on the bid).
Market order: This order type is a request to buy or sell a stock at the next available price. You are guaranteed that a transaction will go through within open session hours. However, you will lack ultimate transparency at what exact price the transaction occurs until it finishes because stocks are usually always moving.
Limit order: This is a request to execute a trade at a specified price. The advantage is that you have maximum price transparency. However, the drawback is that the market may never reach the specified price, leaving your order unexecuted.
Stop-loss order: The stop-loss order is a safety valve that automatically exits your holdings via a market order (sell) when it breaches a certain price threshold. Obviously, this is beneficial if you want to preserve your profits during a volatile session. The disadvantage is that if the stock opens the following day at a much lower price, you will immediately sell at or below that price.
Stop-limit order: A stop-limit order is similar to a stop-loss order with 1 key exception: it absolutely will not sell until the market hits a specified price. In the above example regarding a stock opening at a lower price in a new session, a stop-limit order won’t execute until it reaches the price you set, giving you peace of mind. However, like a “regular” limit order, the market might not hit that price. - Execute your trade.
Deciding between market order and limit order depends mostly on how much you want shares at that point in time. If ABNB is moving rapidly, you may want to use a market order to ensure a position. But if you’re seeking a specific entry point, the limit order gives you transparency.
Best Online Stock Brokers
Airbnb Stock History
Airbnb does not have much of a stock history because it just made its market debut in December 2020. However, you can still see the clearly defined trend of higher highs and higher lows, emblematic of strong momentum.
Still, investors should carefully monitor economic data as well as any evidence of a downturn in momentum. That could signal a future downside move.
Pros to Buying Airbnb Stock
Think you might go for it? Check out reasons why you might want to:
- Relevance to the times: Because Airbnb stock is an investment in the sharing economy — other examples include Uber (NYSE:UBER) and DoorDash (NYSE: DASH) — it’s associated with a burgeoning technology-based sector.
- Rebound opportunity: If the economy continues to produce consistently strong data, this may indicate that consumers are ready to travel, which would be net positive for Airbnb stock.
- Possibly the end of the tunnel: After about a year of struggling with COVID-19 and with the recent distribution of vaccines, it appears we’re in the final stages of this crisis. If so, this bodes well for ABNB stock and many other consumer-related investments.
Cons to Buying Airbnb Stock
Still on the fence? You can point to good reasons for that:
- Economy is still poor: Initial weekly jobless claims have consistently elevated since late August 2020, suggesting significant pain in the labor market. This imposes traveler volume problems on Airbnb stock.
- Potential global travel restrictions: While Airbnb benefitted from Americans traveling regionally in the U.S., this may not be indefinitely sustainable. Some of the hottest markets for the company include international locations such as London or Paris. Further, travel restrictions in destination countries could hurt ABNB.
- Lingering consumer fears: According to Deloitte Insights, only 18% of Americans watched a movie in a theater since the pandemic began. The longer the crisis continues, the more it may constrain Airbnb’s revenue stream.
An Intriguing But Risky Opportunity
Without the pandemic, Airbnb stock may very well be a no-brainer purchase. The sharing economy offers greater influence and presence and allows homeowners to be their own innkeeper while providing greater options for travelers.
In a great twist of irony, the disrupter became the disrupted when the pandemic struck and the global economic devastation remains a sticking point for ABNB.
The final message: Tread carefully.
About Joshua Enomoto
His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.