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The Airbnb stock forecast looks dimmer with another round of COVID-19 at our doorstep.
Airbnb Inc. (NASDAQ: ABNB) made great strides in the months following its December 2020 IPO. It climbed from an IPO price of $68 to $212 by February.
Now, it’s fallen from those February highs to $147 today. And investors are starting to look jittery.
What’s happened since February?
February was when everyone saw Airbnb as the premier “reopening stock.” People were getting ready for their long-awaited vacations, and analysts expected an increase in Airbnb bookings.
However, new COVID-19 variants have threatened these projections. The stock lost 35% between February and May. And it could lose more by the end of August.
While Airbnb stock is still up 116% from its IPO price, let’s discuss whether it’s time to take your profits…
The Technical Case for Airbnb Stock
While Airbnb shares sunk to a low of $134 in May, they’re up 9.7% despite renewed COVID-19 fears since then.
This could have been thanks to a tremendous Q2 earnings report, where the company more than tripled revenue from $335 million to $1.3 billion quarter over quarter. It gave the market a glimpse of how this stock could perform under normal conditions, versus suffering through a pandemic.
But things got rough again in August. The stock lost about 5.9% as the delta variant made headlines.
Today, Airbnb dances above its 50-day moving average of $146.09. And if it breaks below that, it could create some bearish momentum for the stock. If Airbnb stock slides even further, past the 200-day of $143, it’s a further sign that trouble is brewing.
Of course, you could look at Airbnb stock twiddling above the 50-day line as a bearish indicator. But that would ignore the fact that this stock just spent the last month fighting its way up to breaking above the 50-day MA after a months-long slide.
Since it’s right above that line, this one could go either way based on the technicals. And that’s why we need the fundamentals to confirm our suspicions.
Airbnb Stock Forecast for the Rest of 2021
Airbnb is still a very young company whose industry so far has not been fully infiltrated. Under normal circumstances, you would expect Airbnb to be swarmed by competition in the digital lodging industry. That’s kind of what has happened in the last few years, with hotel chains even offering Airbnb-style rentals.
Still, even if plenty of copycats enter the market over the next few years, there’s something to be said about being the first and most-recognized brand in the digital lodging industry.
In terms of competing with similar companies, Airbnb is still top dog.
The biggest question mark, however, is still how COVID-19 will impact this industry as a whole. It took a big hit in 2020; companies were ill-prepared, and we knew a lot less about the spread of the virus.
Today, despite many unknowns remaining, people are vaccinated, and the service industry is better equipped to handle crowds with social distancing and other safety measures.
Regardless of how prepared these companies are, though, one thing is clearer this year than last: COVID-19 might be here to stay for the long haul, and that means hospitality would take a more permanent hit.
This could play into Wall Street’s expected loss of $1.32 per share this year.
Airbnb is not profitable yet, but the company thinks it can cross that line in 2022. Still, that’s a tough sell in the current environment.
The bottom line is that Airbnb stock price will be iffy over the next few months. But here’s what that means for you, whether it’s a buy or sell today…
Should You Sell Airbnb Stock?
Yes, there are bullish technical indicators for Airbnb today, but those could be stifled by the current COVID-19-impacted market. Airbnb stock probably will not see the breakout it would have in a normal, open economy.
If you’re thinking about buying Airbnb stock right now, you risk a short-term loss.
If you bought Airbnb at IPO, you might see this as an opportunity to double your money before the stock drops.
Something you can count on, though, is no matter how slow travel and lodging gets, there will always be some baseline demand for these services.
That could factor into why the smart money is still very much into Airbnb stock. The number of mutual funds holding Airbnb is up to 926 from the 655 counted at the end of 2020.
Have we reached the point where that’s reflected in the price yet? Probably not. But the long-term value of the Airbnb brand is reason enough not to sell just yet.
Though, the action to take going into winter – with chances of a disease breakout in the colder regions – is to wait for an even lower entry point for Airbnb stock.
If you really want to roll the dice for faster profits, you might sell Airbnb now and buy again at a lower price in a couple months.
Ultimately, Airbnb is a still long-term hold set to capture a big future trend that isn’t going away soon. Its services will continue to be in demand – it’s just a question of how much and in what form that will take going forward.
Airbnb stock is still not one to pass up, COVID-19 or no COVID-19. And the industry has not yet changed so drastically to justify taking profits on an early purchase just yet.
About the Author
Mike Stenger, Associate Editor for Money Morning at Money Map Press, graduated from the Perdue School of Business at Salisbury University. He has combined his degree in Economics with an interest in emerging technologies by finding where tech and finance overlap. Today, he studies the cybersecurity sector, AI, streaming, and the Cloud.