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Author: Alan LittleDate: 2020-12-15

Airbnb (ABNB) down 9% days after $100bn IPO shocks Wall Street

Airbnb (ABNB) traded 9% lower on Monday after Gordon Haskett lowered its rating to underperform just four days after the holiday rentals company’s blockbuster IPO that initially valued the company at around $100bn.

Analyst Robert Mollins said in a bearish note that investors are looking to sell stock due to what they believe is an overinflated share price following its market debut.

Mollins noted: “An overwhelming majority of investors we’ve spoken with have been unable to justify Airbnb’s valuation premium relative to OTAs and expressed interest in realizing their quick gains.”

The scale of Airbnb’s success shocked even its CEO Brian Chesky.

ABNB shares were sold for $68 to investors on Wednesday, but began trading at $139 when markets opened on Thursday and eventually closed at $144.71.

Just 10 days ago, the company said that shares would sell at between $44 and $50.

Airbnb’s market cap on Thursday meant that it was more valuable than some of the largest US-based hotel chains, including Marriott (MAR) and Hilton (HLT), which carry a cap of $41bn and $29bn, respectively.

Mollins believes that the valuation is “more than stretched” and likened Airbnb to more modest companies in the online travel space, such as Expedia (EXPE) and Booking Holdings (BKNG).

Gordon Haskett had opened its coverage for Airbnb with a buy rating and $77 price target seven days ago.

The firm now offers an underperform rating and $103 PT.

The downgrade and sheer scale of the IPO appeared to be weighing on investor sentiment at the start of the new week.

Airbnb shares plunged after the Nasdaq opened and were down around 9% at $126.94 just after midday (ET).




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