Airbnb Under Fire: Short-Seller 'The Bear Cave' Slams Platform Amid Guest 'Horror Stories'

Zinger Key Points
  • "The Bear Cave" says professionally managed properties pose a serious threat to Airbnb's business model.
  • Airbnb's future will look significantly different than its past, according to Edwin Dorsey

Edwin Dorsey, the author of "The Bear Cave" newsletter, has published a short report on Airbnb, Inc. ABNB, noting several scandals and "horror stories" impacting platform clients, as well as a growing competitive threat. 

"Investors love this company, but behind the scenes, this company's most important partners are angling to compete directly," Dorsey tweeted before the article was published. 

According to the newsletter, Airbnb's business has turned toward professionally managed properties, many of which are now preparing to compete directly with the firm.

The company's top professional hosts are developing their own booking platforms, providing cheaper prices to compete with Airbnb, as well as expanding their own email lists and distribution and offering loyalty incentives to book off of Airbnb. 

Read also: Short Seller Who Predicted FTX, Silvergate Capital Collapses And Shorted SVB Financial Has New Banking Target: 'A Worldwide Money Laundering Story'

Professional property managers account for 1% of all vacation rental hosts on Airbnb, but they handle 23% of active listings, which produce 35% of the company's total revenue.

According to the short seller, "Airbnb's future will look a lot different than its past because the company will now need to compete against its best and largest hosts." 

Benzinga has reached out to Airbnb for comment on the "The Bear Cave" report.

Increasing Number of Horror Stories 

Dorsey wrote that "horror stories" involving guests staying at Airbnb rentals have recently escalated, including unexpected cleaning requirements, last-minute cancellations, and multiple cases of visitors discovering hidden cameras in bedrooms and bathrooms. 

He also referenced two stories in the report, one involving the accidental overdose of a 19-month-old child in an Airbnb that had been used as a party house, and the second, a $7 million settlement that Airbnb paid to a woman who had been raped by a previous guest who had made copies of the apartment key and reentered her rental.

Stay Heirloom Encourages Airbnb Bypass

Stay Heirloom, a prominent supplier of large-format, premium short-term rentals with over 300 listings in various U.S. cities, is encouraging visitors to book directly on their website rather than through Airbnb. 

"The Bear Cave" demonstrated that renting directly with Stay Heirloom saves guests nearly half of the fees charged by Airbnb. 

Source: The Bear Cave

ABNB Shares Down 4% After The Short Report

Airbnb is down 3.5% on Thursday, following the publication of the short report by "The Bear Cave." 

Shares of the online marketplace for short-term homestays are now trading close to the lows seen in February, and are on track to post their fourth straight session of losses. 

ABNB price action on April 6th, 2023 – Source: TradingView

Read next: C3.Ai Stock Continues To Fall: What's Going On?

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: Short SellersShort IdeasOpinionTrading IdeasAirbnbEdwin DorseyThe Bear Cave
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!