Airbnb Inc. (NASDAQ: ABNB) entered the public market when the travel industry was in crisis. Although the stock is trading almost twice as much as it did when it was initially listed, it is still profitable. Airbnb’s outlook for the long term appears positive. Investing in stocks may involve choosing the best time to do so.
Airbnb’s business model has contributed to its rapid growth by connecting both those looking to rent an Airbnb and renting Airbnbs on the same platform. However, Airbnb still falls far short of capturing 10-20% of the potential market despite growing its revenue from $919 million in 2015 to $4.8 billion in 2019. According to the company, the total address market for its product is $3.4 trillion. Although in 2019, the company accounted for $38 billion in gross bookings – about 1% of the market opportunity.
AirbnbInc (ABNB) initially suffered a 70% drop in demand during the COVID-19 crisis. A quarter of the company’s employees were laid off as a result of the company’s reorganization. But demand later recovered, although it wasn’t driven by international tourism, but rather by travelers’ travel within their country. According to Airbnb, booking volume is up around 70% during COVID-19.
A slight change in traveler behavior has resulted from the pandemic. As a result of remote work availability, many tourists left their homes without waiting for a vacation and worked and stayed in new places simultaneously. Consequently, Airbnb properties are booked for longer periods than in the past. The Economist report indicates that, by June 2020, Airbnb properties have stayed on average for a week, almost double the previous average. A more than 80 % share of domestic bookings has been reached.
The Airbnb business can keep going even during a tough travel season this way. Sales can increase rapidly for a company under better conditions. About 5 million properties across 220 countries and regions have rental ads on the platform today. The vast array of properties provides a variety of options for customers. As a result, many property owners list their properties.
AirbnbInc (ABNB) only risk at this particular time is competition from other booking platforms and uncertainty surrounding the pandemic. International tourism has yet to return despite the beginning of vaccination.