Has Airbnb Been Affected by the Delta Variant? How Covid-19 Restrictions Help and Hurt the Company

Last Updated on August 26, 2021

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With many travel restrictions in place, and with the Delta variant complicating the “return to normal” where does Airbnb stand?  

With awesome timing, Airbnb went public in December 2019, around the time that the first hospitalizations for a disease that evaded existing classifications were recorded by the Wuhan City Health Committee in China. 

Is Airbnb a Good Investment?

An investor who is looking into ABNB with the thought of buying a block of shares might consider the following “pro” and “con.” On the pro side: the company had a very successful second quarter, with revenue up nearly 300%.

One might argue that worry about the Delta variant has acted as an artificial depressant, so that the market has failed to re-value the company appropriately for that performance. 

On the con side: one could as easily argue that the market already values ABNB at an exorbitant level. Present stock value amounts to a capitalization of $96 billion, which is 13 times Bank of America’s estimates for the company’s 2022 revenues. 

The pro side: consider that no one really expects a return to the “old normal” in terms of travel patterns. When travel does return, many travelers will look to go off the beaten path, will stay in places longer, and will want more flexible schedules than before, according to Airbnb’s Chief Executive Officer Brian Chesney. Those are all strong suits for Airbnb. 

The con side: if booster shots and new levels of vigilance show that Delta isn’t as strong as we think, there could be a mass call on the part of employers for remote workers to return to physical offices. That could constitute a nasty headwind, for ABNB almost as much as for Zoom (NASDAQ: ZM). 

Airbnb’s History as a Public Company

Airbnb (NASDAQ: ABNB) priced its IPO low, at just $68 a share. It opened at $146, and closed that first day of trading, December 11, 2020, at $139.25. 

It came out of the gate like gangbusters and closed above $212 on February 12, 2020.   

Then the realities of the lockdowns hit, and the price slid with some consistency until May 21 of this year, when it found a bottom at $134.671. It has since, as of this writing, stayed in an equilibrium. So one obvious question for investors is: where will it go from here? 

Although Airbnb operates around the world (with hosts in 191 countries), the answer to this question depends largely on what happens in the United States, and the restrictions that will exist going forward to and from the United States. 

Tread Lightly in the Coming Months

It is probably a sound conclusion that Airbnb is at present at least slightly overvalued. With so many unknown hanging over travel and all its ancillary industries, Airbnb’s market cap does seem high. 

Still, investors who already have Airbnb in their portfolios might consider holding it. And as a columnist at Seeking Alpha recently suggested, investors without Airbnb in their portfolios yet might want to be cautious, and perhaps be on the lookout for a dip in price that will make this a bargain opportunity.