TOPLINE: Shares of Airbnb have plunged 25% since their monster trading debut on Thursday, and analysts forecast the stock could slump further as recently priced initial public offerings flash warning signs in the market.
After a bearish analyst call on Monday, shares of Airbnb are falling 5% today pushing shares down to about $124 apiece, or 25% lower than their trading day high of $165.
The fortunes of the firm’s three cofounders–Nathan Blecharcyzk, Joe Gebbia and CEO Brian Chesky–have plunged nearly $5 billion combined since Thursday’s close to about $8.5 billion for each of Blecharcyzk and Gebbia and $9.5 billion for Chesky.
In a note downgrading Airbnb’s stock on Monday, Gordon Haskett analyst Robert Mollins said Airbnb’s IPO surge “more than stretched” the firm’s share prices, which have lifted Airbnb’s valuation to roughly two-times estimated bookings in 2022.
At that rate, Airbnb’s valuation, relative to its revenue potential, is more than three times higher than the average among competing online travel agencies like Expedia and Booking.com, Mollins further noted.
He downgraded the firm to underperform from a pre-IPO buy rating, but upped his price target to $103 from $77.
Wall Street’s still generally bearish on Airbnb’s current price levels: three analysts covering the stock give an average one-year price target of about $96, representing nearly 25% downside to current prices.
“An overwhelming majority of investors we’ve spoken with have been unable to justify Airbnb’s valuation premium relative to [other online travel firms] and expressed interest in realizing their quick gains,” Mollins wrote in a note to clients on Monday. “Investors… like Airbnb’s business model and want to be long-term holders, but are now looking at selling the stock because they no longer feel comfortable owning it.”
Shares of Airbnb skyrocketed as much as 120% during the home rental giant’s long-awaited first day of trading, propelling the firm’s market cap to more than five times its last private market valuation of $18 billion in April. Despite the damper the pandemic is putting on the travel industry, Airbnb shares were priced at a higher than expected $68 on Wednesday, allowing the firm to raise roughly $3.5 billion in its initial public offering. That bested the $3.4 billion DoorDash raised just one day earlier to make Airbnb’s public market debut the third-largest of 2020. DoorDash shares have tanked nearly 20% since Wednesday.
$103 billion.That’s how high Airbnb’s market capitalization got on Thursday–higher than all publicly traded U.S. hotel chains combined. It’s now at about $73 billion.
On Saturday, fintech startup Affirm pushed its IPO back to January at the earliest, as people familiar with the matter cited hesitancy around the “extreme” first-day pops of Airbnb and Doordash as well as delays sparked by an influx of listing requests at the Securities and Exchange Commission. That echoed concerns from gaming company Roblox just one day earlier, when the firm told employees that its planned December IPO would instead happen early next year given the uncertainty around recent IPO valuations.
–By Jonathan Ponciano, Forbes Staff