Airbnb, the online home sharing marketplace, has changed the way people travel around the globe. The marketplace lists over 7 million properties from nearly 4 million hosts, and it continues to expand at a rapid pace. Moreover, Airbnb has spawned a sprawling sub-industry of home rentals and rental analysis that further reinforces the dominance of this company in travel.
More than a decade after launching, Airbnb is going public this week in one of the hottest IPOs of the year. Airbnb shares are expected to disappear quickly. In fact, the company has already raised its IPO (initial public offering) price range by 20% because of anticipated demand for the shares.
If you want to get in on the Airbnb IPO, this guide will explain everything you need to know. We’ll cover how to buy Airbnb shares in the UK with 0% commission and highlight why we think Airbnb shares are a great choice for long-term investors and short-term traders alike.
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Airbnb is holding its IPO on the NASDAQ stock exchange in the US on Wednesday, December 9. In order to buy Airbnb shares in the UK, you need a stock broker that is offering trading on this newly public company.
The good news is that since Airbnb shares are attracting so much attention from investors, many UK brokers are launching trading on this company as soon as it goes public. Still, you’ll need to choose your broker carefully to ensure you’re getting the trading tools you need. Especially if you plan on day trading Airbnb after the IPO, you need access to up-to-the-minute technical charts and analysis tools.
In addition, it’s important that you don’t overpay for Airbnb shares. Look for a broker that offers 0% commission trading, minimal account fees, and tight spreads.
To make your choice easier, let’s take a look at two of our top-rated UK brokers that you can use to buy Airbnb shares.
eToro is one of the best brokers in the UK for investing in any stock, including Airbnb. The broker offers stock trading for more than 800 global shares, including nearly all of the major tech companies in the US. eToro’s share dealing accounts offer below-average trading spreads, so you can get the best deal possible on Airbnb shares.
In addition, eToro offers CFD trading on Airbnb and other shares. Buying and selling stock CFDs is 100% commission-free, and you can apply leverage up to 5:1 to your trade.
Importantly, eToro’s trading platform includes all of the tools you need to analyse Airbnb shares before you commit to this new stock. The broker has its own proprietary charting interface, which includes more than 100 built-in indicators and dozens of drawing tools. Although you cannot create your own custom studies, it’s more than powerful enough for the majority of traders and investors. eToro also offers a mobile stock trading app for iOS and Android.
Another reason we recommend eToro is that it comes with a robust social trading network. You can interact with other traders from the UK and around the world, share strategy ideas, and host discussions about Airbnb’s prospects. eToro also leverages this network to calculate a market sentiment score for every asset it offers, which enables you to see whether traders are buying or selling Airbnb after the IPO.
It’s also worth noting that eToro offers a lot more than just share trading. This broker also has more than 450 ETFs available, as well as CFDs for forex trading, commodity trading, and cryptocurrency trading. eToro is fully regulated by the UK Financial Conduct Authority and your trading account is backed by the government’s Financial Services Compensation Scheme in case the broker runs into financial trouble.
67% of retail investor accounts lose money when trading CFDs with this provider.
2. Libertex – Trade Airbnb CFDs with Zero Spreads
Libertex is primarily a CFD broker built for forex trading. But this brokerage also offers trading on several dozen popular US stocks, including Airbnb following the company’s IPO. We like Libertex because all share CFD trades are completely spread-free. This is something you won’t typically find among CFD brokers, and it makes it much easier to know how much trading will cost you with Libertex. Instead of spreads, the broker charges a fixed commission of 0.1% to 0.2% per share trade. On top of that, you can apply leverage up to 5:1 to maximise your profit potential when trading Airbnb shares.
Another great thing about Libertex is its high-quality CFD trading platform. This web-based trading interface offers in-depth charting capabilities and dozens of technical indicators. We also liked that the platform layout is highly customisable, so you can view multiple charts at the same time or pull in a stock market news feed to assist your decision-making. Libertex’s trading platform is also available on iOS and Android mobile devices.
One thing to note about Libertex is that this broker doesn’t provide a huge array of analysis tools. There is an economic calendar available, but you won’t find detailed research reports or price targets from market analysts. If you rely heavily on this type of third-party analysis rather than on technical charting, eToro may be a better choice for you.
If you want to expand beyond buying Airbnb shares, Libertex offers CFDs for a wide range of assets. You can trade stock indices, commodities, and over 40 forex pairs. The broker also integrates with MetaTrader 4 for forex trading, which offers the ability to create forex signals and custom indicators.
Libertex is regulated by the Cyprus Securities and Exchange Commission (CySEC) and is considered highly trustworthy. The broker has been operating for over 23 years and continues to grow around the world.
Your capital is at risk.
Although investors have been awaiting an IPO from Airbnb for many years, the company’s move to go public represents one of the first times that the public is getting an in-depth look at Airbnb’s financials. It’s certainly a good sign that the company has not only survived the COVID-19 pandemic, but is also going public even as travel remains suppressed around the globe.
Still, it’s essential that you do your own research and look at the company’s past performance before buying Airbnb shares. The share price is likely to rise quickly from the IPO range, so it’s important that you have an idea of what this company may be worth and where it’s headed in the years ahead.
Airbnb was founded in San Francisco, California in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk. The company started in the founders’ apartment, where they had an air mattress that guests could sleep on for a much lower nightly rate than a standard hotel in the Bay Area.
The company grew quickly thanks to help from Y Combinator, an incubator program for tech startups, and funding from venture capital firm Sequoia Capital. Airbnb established its first international office, in London, in 2011, and had listings across North America, Europe, and Asia by 2012.
Airbnb first became profitable in mid-2016 after an astounding 80% year-over-year revenue growth. In 2018, the company posted an annual profit of $200 million. However, Airbnb launched a number of new initiatives around experiences and acquired HotelsTonight for $400 million in 2019, and the company posted a loss of $322 million for the year.
The coronavirus pandemic created enormous problems for Airbnb in the first half of 2020. Bookings dropped by up to 96% at the height of the pandemic, and the company angered hosts by allowing guests to cancel stays for a full refund – overruling the refund policies that hosts had always been allowed to create for themselves.
Airbnb created a $250 million fund at the end of March to help hosts make it through the pandemic and repay them for lost bookings. In addition, Airbnb laid off 1,900 employees – nearly 25% of the company’s workforce – in April in order to conserve cash for the duration of the pandemic.
In 2017, Airbnb was valued at $31 billion when the company raised $1 billion in funds. In 2020, however, Airbnb slashed its valuation to just $18 billion in order to raise cash to make it through the coronavirus pandemic.
Ahead of the Airbnb IPO, the company initially priced shares in a range from $44 to $50 per share. However, just days before the IPO, Airbnb raised its price range to $56 to $60 per share. The company expects to raise more than $2.5 billion from the IPO at a market cap of $35 billion.
At this time, it is not possible to calculate Airbnb’s earnings per share (EPS) or price to earnings (P/E) ratio. The company’s latest reported earnings are for 2019 and the number of shares that actually hit the market won’t be clear until after the IPO.
Airbnb does not plan to offer a dividend to shareholders in the near future. The company has been profitable at times in the past, but reported a loss in 2019 and more than likely will report a larger net loss in 2020 due to the coronavirus pandemic.
Should I Buy Airbnb?
Airbnb’s IPO is one of the most widely anticipated market events of the year. Already, analysts are predicting that the Airbnb IPO is over-subscribed – meaning that there are more investors, and particularly large investment firms, that want shares than there are shares to be made available. That bodes well for anyone who can get their hands on shares at the IPO price.
Looking beyond the IPO, though, there’s a lot for investors to like about Airbnb. Analysts are extremely bullish about this home sharing marketplace, and we think it has a lot of potential, too. Let’s take a look at some of the reasons why you should buy Airbnb shares around the IPO.
Leadership through Hard Times
For several years, there have been questions about whether CEO Brian Chesky – one of Airbnb’s founders – was the right man to lead Airbnb as a public company. Those questions have virtually disappeared in the wake of the coronavirus pandemic.
Chesky made the hard but necessary choices at the start of the pandemic and put Airbnb’s long-term profitability ahead of everything else. He cut 25% of the company’s global workforce, created a blanket refund policy to keep Airbnb guests happy, and moved quickly to repair the company’s relationship with hosts by creating a $250 million fund for them.
More important, Chesky put Airbnb Experiences – a pet project that had been criticized heavily by investors and analysts for diverting attention and losing vast amounts of money – on permanent hold. He also took on $2 billion in new funding at a valuation that was half what Airbnb commanded in 2017.
All of this goes to show that Chesky has shed the idealism that comes with being a founder. The CEO clearly understands what it takes for Airbnb to succeed as a public company, not just in 2020 but for the entire decade ahead. At the same time, Airbnb itself is a leaner, chastened, and more profit-focused company with a huge pile of cash at its disposal as travel picks up going into 2021.
What makes Airbnb so valuable and so exciting for investors is that this isn’t just another travel company. Airbnb has fundamentally shifted the way that people approach travel, both locally and around the world.
In just 12 years, the company has shaken the hotel industry – an industry that once seemed unquestionable – to its core. The term ‘Airbnb’ is used as a verb in much the same way as ‘Google.’ It has 4 million hosts, 800 million guests, and properties listed in 100,000 cities around the world.
Moreover, as travel bounces back in 2021 and beyond, Airbnb is poised to capture an even greater share of the travel industry. Traditional hotel chains have been battered by lost revenue this year. While the same is true for Airbnb, the company has billions in cash sitting in its war chest thanks to its March funding round and anticipated funding from the IPO. Expect Airbnb to use that cash to crush rivals next year and clearly establish itself as the go-to platform for travelers.
What’s especially impressive about all of this is that when Airbnb launched in 2008, the idea of staying in someone else’s home was virtually unthinkable. Airbnb has changed the norms around travel, and the process of changing norms is going to continue in the company’s favour.
Another reason to like Airbnb is that it’s a digital platform, much like Amazon or Facebook. That’s important because platforms come with a variety of network effects that have led to the winner-take-all industries that are now prevalent in tech.
Simply by virtue of being large, Airbnb has built an incredible moat for itself. If a host wants to leave Airbnb, where would they go? If another company wants to compete with Airbnb, how would they gather the scale needed to attract guests and hosts?
Without easy answers to those questions, Airbnb will continue to dominate the market for home sharing and travel.
Step 3: Open an Account and Deposit Funds
Ready to buy Airbnb shares? The best way to get in on this hot IPO is to sign up for an account with eToro, our top-rated online stock broker in the UK. eToro offers commission-free share CFD trading, low-cost share dealing, and advanced research and analysis tools.
To sign up for eToro, head to the broker’s website and click ‘Join Now.’ Create a username and password for your account, or sign up using a Google or Facebook account.
eToro requires you to verify your identity in order to comply with UK government regulations. You can complete this step online by uploading a copy of the picture page of your passport or of your driver’s license. You’ll also need to upload a recent bill that shows your current address.
Next, you can fund your eToro account. The broker requires a minimum deposit of £140, which you can pay by bank transfer, credit or debit card, or e-wallet (including Neteller, Skrill, and PayPal).
Now you’re ready to buy Airbnb shares with eToro. From the eToro dashboard, search for ‘Airbnb’ and click ‘Trade’ when it appears. In the order form, enter how much money you want to invest in Airbnb. You can buy any amount over £40 since eToro enables you to purchase fractional shares.
eToro also enables you to set a stop loss or take profit level for your trade, if desired. You can also apply leverage up to 5:1 if you’re trading CFDs.
When you’re ready, click ‘Open Trade’ to buy Airbnb shares.
Given the tremendous factors working in Airbnb’s favour, we think this company is a strong buy. Airbnb proved that it could navigate one of the most financially difficult situations imaginable and come out stronger for it. At the same time, the company has a massive pile of cash to deploy as travel rebounds in 2021 and its platform-centric business model has created a moat that seems uncrossable anytime soon.
In fact, the IPO price of $60 per share appears to dramatically undervalue Airbnb (even after the 20% price adjustment). Analysts expect Airbnb to grow by 35% per year for the next several years and to earn $6 billion in revenue by 2022. Even if it remains unprofitable for several more years, Airbnb has proven that its business model can be profitable. One analyst has suggested that Airbnb could be worth over $100 billion by 2022, which would be equivalent a share price of around $150.
Of course, we should caution that nothing is guaranteed. An IPO is always a high risk investment, even if the company is as promising as we believe Airbnb to be.
Airbnb’s IPO is one of the most anticipated market events of 2020. Shares are expected to disappear quickly, so be prepared to pay more than the IPO price of $60 per share if you want to buy Airbnb stock.
Still, we think Airbnb is a very good long term investment. This home rental marketplace has a massive global footprint and has done an excellent job weathering the coronavirus pandemic. In addition, Airbnb has a war chest of billions of dollars that can help it further dominate the travel industry as global travel rebounds in 2021 and beyond.
Ready to invest in Airbnb? You can buy Airbnb shares today with eToro!
67% of retail investor accounts lose money when trading CFDs with this provider.
What is Airbnb’s ticker symbol?
Airbnb is listing on the NASDAQ stock exchange with the ticker symbol ‘ABNB.’
Who is the current CEO of Airbnb?
Brian Chesky is the current CEO of Airbnb. Chesky was one of the company’s founders in 2008.
Can I buy Airbnb shares in an ISA or SIPP?
You can buy Airbnb shares in an ISA or SIPP if your broker offers shares of this company. Shares may not be available until several weeks after the IPO.
How many countries does Airbnb operate in?
Airbnb currently operates in 220 countries and has listings in over 100,000 cities. Notably, Airbnb operates in China, where many US companies are blocked.
Is Airbnb profitable?
Airbnb posted a profit of $200 million in 2018. However, it lost money in 2019 and is expected to lose more than half a billion dollars in 2020. Analysts expect Airbnb to remain unprofitable through at least 2022.