How to Buy Airbnb Stock: Invest in the Vacation Rental Marketplace
Airbnb is one of the most popular alternatives to traditional vacation lodging -- allowing property owners and landlords to offer short-term rentals to travelers.
With the company changing the market for global hospitality, you may be interested in becoming an investor.
Proper investing can help you grow your savings over the long term and reach goals such as retirement.
Buying shares in just one company ties your portfolio’s performance to that company’s performance. If the company does well, you can profit, but if it struggles you could see significant losses.
If you’re interested in buying stock in Airbnb, here’s what you need to know.
Airbnb (ticker symbol: ABNB) is an American travel company that helps property owners rent their properties to travelers who need a place to stay.
It competes with hotels and travel companies that help people find somewhere to stay when on vacation.
The company offered its public shares for sale on December 10th, 2020.
The company was founded in 2008 and produced $4.7 billion in revenue in 2019.
Research and Analysis
Whenever you’re considering an investment it’s important that you take the time to do your research and due diligence. Each investor's approach to research will differ.
For example, some investors use fundamental analysis when researching potential investments.
This involves looking at a business’s stats and fundamentals, such as revenue, expenses, debt, and profits.
Fundamental analysts aim to find investment opportunities in companies that are undervalued by the market.
These types of research often consider the company’s position compared to competitors when making an investment decision.
Some of Airbnb’s main competitors include:
Another strategy that some investors use when researching potential investments is technical analysis. Technical analysts look at stock price charts to try to predict future changes in the stock price.
Keep in mind:
Even if fundamental or technical analysis for a company shows that a company may have potential, there is no guarantee that an investment will succeed.
The company could fail to capitalize on its opportunities, fall foul of bad luck, or be overtaken by a competitor.
Whenever you invest, you’re taking a risk.
However, investing in a single company is particularly risky when compared to building a more diversified portfolio.
If you put all your eggs in one basket and that company fares poorly, you could lose a large portion of your portfolio.
Every company’s success relies on its ability to produce, maintain, and sell new products and services.
Without successful products, companies have nothing to sell and no way to produce revenue to keep the business running.
Each company faces different risks that investors have to consider.
Market-placed based service
Airbnb is unique in that it primarily operates a marketplace. It doesn’t have significant assets or products that it sells.
If people decide to stop listing their homes on Airbnb, the company won’t have an inventory of properties that customers can rent.
If competitors offer more competitive fees or other features that draw property owners, Airbnb will have to find a way to compete, which will likely affect its bottom line.
Changing travel habits
The Covid-19 pandemic has had a significant impact on the world economy and travel-related businesses have seen massive impacts.
Airbnb has to contend with the pandemic and how it will affect travel for years to come.
If people choose to travel less, that could lead to fewer bookings which will affect Airbnb’s shares.
Other Ways to Invest in Travel Stocks
Buying shares in a single company, especially one that recently IPOed, can be exciting.
You’ll get to watch the company succeed or fail and follow it in the news, seeing how its actions affect your portfolio.
However, investing in just one business is risky. If the company’s stock doesn’t perform well, you could have a stagnant or even a shrinking portfolio.
A popular strategy for reducing investment risk is to diversify your portfolio by buying shares in multiple companies. If one company does poorly, you’ll own other shares that can pick up the slack in your portfolio.
Mutual funds and ETFs are among the easiest way to build a diversified portfolio.
These funds hold shares in hundreds or thousands of different companies. You can get exposure to all of those businesses by buying shares in a single fund.
Some funds focus on investing in specific industries, like travel, while others focus on specific countries or even hold an international variety of stocks. That makes it easy to invest in the kinds of companies that interest you.
Most mutual funds and ETFs will publish a list of their holdings.
If you want to make sure that some of your investment goes toward a specific stock, such as Airbnb, you can read the fund’s disclosures to make sure that it holds the company you’re interested in.
How to Buy Airbnb Shares
If you’ve decided that investing in Airbnb is the right move for you, the first thing that you’ll need to do is open a brokerage account.
Open a brokerage account
Brokerage companies help people invest in stocks, bonds, ETFs, and other securities through a brokerage account.
Many brokerage companies, like Vanguard and Fidelity, offer brokerage accounts and manage their own line of mutual funds and ETFs.
Often, you can get perks like reduced transaction fees or premium account services if you invest in your broker's line of funds. If you have a specific fund that you want to invest in, that could affect the broker you want to work with.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
After you open your account, it’s time to place an order to buy shares.
The most basic type of order is the market buy order. With this order, you tell your broker how many shares you want to buy. Your broker buys the shares at the lowest available price and places them in your account.
You know exactly how many shares you’ll get, but you might wind up paying more than expected.
To avoid that pitfall, you can use a buy-limit order. With this order, you tell your broker how many shares to buy and the maximum price you’re willing to pay per share. Your broker will buy shares at the lowest available price, so long as that price is below your stated maximum.
This way, you can know that you won’t overpay for shares.
However, if your broker can’t find any shares under the maximum you set, you won’t wind up buying shares, which means you could miss out on an increase in the stock’s price.
Consult an Advisor
All investing is subject to risk. Even if you buy shares in a diversified ETF or mutual fund, you’re taking a risk but buying shares in a specific company, like Airbnb, is even riskier.
It’s best to treat these kinds of investments as something that you do with expectations that you'll lose all the money and keep the majority of your money invested in a more diverse portfolio.
If the stocks you pick do well, you can enjoy the profits. If your picks do poorly, the majority of your portfolio should still be alright because it will be invested in less risky securities.
Consulting with an advisor to help you make good investing decisions is a good way to make sure you don’t risk too much of your portfolio on high-risk stocks.
As with all investing, you are putting your money at risk, so only invest money you can afford to lose.