Why Airbnb stock crashed today – Then it got a little better | The motley fool

What happened

Shares of virtual hotel owners Airbnb (NASDAQ: ABNB) stuck in tech stock flash crash Tuesday morning, falling more than 10% in early trading when the Nasdaq fell 4%.

That’s the bad news. The good news is that at 11:30 AM EST, things had settled down a bit. Nasdaq recovered to “only” 1.7% of sales and Airbnb is down “only” 5.2% – and Loop Capital may be part of the reason for Airbnb’s partial recovery.

Fortune teller moves hands over a crystal ball

Image source: Getty Images.

So what

Do you see that Loop Capital upgraded Airbnb shares to “buy” yesterday, before the company’s first earnings report as a listed company, due on Thursday, February 25th. Loop allotted the shares a price target of $ 240, which means about 30% upward to the stock, according to StreetInsider.com.

“Booking growth for other alternative accommodation providers … improved sequentially during 4Q,” Loop notes, and that trend means Airbnb may exceed expectations during Q4 2020, and it “continues to 1Q” in 2021 as well.

Now then

The most exciting part of Loop Capital’s analysis – for equity investors – is this observation: Third-party analytics firm AirDNA has observed that “ABNB unit volume has shown strong correlation with UBER rideshare bookings over the 11 quarters of registered data.”

There are now two conclusions that an investor can draw from this observation (provided it applies in the future). Primarily, Uber (NYSE: UBER)beat profit“but” missed revenue “when reported earlier this month, a fact that could similarly mean that Airbnb will disappoint sales when the reports on Thursday. (This may mean that Loop is making a bad call to recommend that you buy Airbnb shares today).

Perhaps more importantly, however, the fact that Uber schedules its earnings reports about ten days before Airbnb’s reports means that investors may be able to get some sort of preview of how Airbnb performed in a given quarter by simply examining Uber’s report in advance.

To put it more simply: Uber’s earnings reports can give investors a kind of crystal ball, so they can peer 10 days into the future and see what Airbnb’s revenue will be like. Let’s vote back on Thursday and see how it works.

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