Airbnb’s cleared the goal posts, again! 🏉 In February this year, Airbnb (ABNB) had their largest one-day stock jump, up 13%, and now they’ve done it again. On Friday 1 September, Airbnb shares closed at US$132.70. When the Nasdaq opened the following Tuesday after US Labor Day, boosted by extended trading, their stock opened at US$144.02, a jump of 8.5%. Since then, it’s crept up another 2.3% - making a total stock jump of 11% this month.
So why are investors buying in? Airbnb released better than expected Q2 results, then got the call up to the S&P 500 kuputohu or index, and is off the subs bench, joining ‘private equity behemoth’ Blackstone (BX). The late players are replacing Newell Rubbermaid (NWL) and Lincoln National (LNC), who’ve taken early showers. 🚿
This means many tahua or exchange-traded funds (ETFs) and hāngū or passive investment funds that track the S&P 500 Index will now need to buy Airbnb shares. And some hohe or active fund managers who are benchmarked against the S&P 500 may also choose to add Airbnb to their shopping list.
The news booted Airbnb’s year-to-date stock up 73.5%. This is more than double the Nasdaq Composite Index, which is up 33% so far this year. Airbnb is slowly regaining ground lost during the global pandemic, and as travel certainty has slowly returned, their stock is up 18% since the same time last year. But Airbnb still faces challenges.
From NYC to Paris, Airbnb, hosts and economy travellers battle a conveyor belt of woes
Is Airbnb facing their biggest game yet? Last week NYC regulators kicked off their clamp down on short term rentals in a law that came into effect in March this year. ⚖️
Enforceable rules include:
- Hosts must be present during guest stays
- Both guests and hosts must have unlockable access between all the rooms
- No more than two guests can stay at one time
- Hosts must tell NYC officials who else lives at the property
The city’s regulations impact hosts using Airbnb - as well as with VRBO owned by Expedia (EXPE), and Booking.com owned by Booking Holdings (BKNG) (also owners of Kayak and Agoda) - with all property-holders required to register with the city if they are renting accommodation for less than 30 days. This, despite Airbnb flexing their litigious muscles on what they’ve labelled a ‘de facto ban’ on their sharing economy services.
However, as of last week, a mere 3,250 hosts of the total estimated 15,000 to 38,500 Airbnb NYC listings have actually registered - and only 257 approved - with the remaining thousands of hosts potentially facing fines of up to US$5,000.
While New York City accounts for only around 1% of Airbnb’s 2022 revenue - that’s US$85 million, according to Airbnb - other cities aiming to free up rental whare and homes for residents could be sounding alarm bells for the California company.
- Barcelona was the first European city to ban all short-term private rentals
- Rental caps and strict regulations already exist in some cities including New Orleans, London, and Rugby World Cup hosts, Paris
- Also joining them, last Friday, might be Florence, which announced a plan to ban short stay rentals 🚫
Why the Airbnb pile on? A report found that in New York, for ‘every 1% increase in Airbnb listings, neighbourhood rents rose 1.6%’. Some of the need for regulation may also be due to the lucrative passive income practice of Airbnb arbitrage. This is where people take long term rental leases on multiple properties, paying for them by charging high short term rental fees on Airbnb and pocketing the rest - some people making up to US$150,000 a year. Ka-ching!
Is a Kiwi-founded start-up joining the fray?
Meet capital-raising ‘hopeful’ Kiki, a subletting platform eyeing up the NYC market. 🏙️ Kiki was created by University of Auckland business graduate Toby Thomas-Smith, and adopts a ‘circular economy’ model by matching students and professionals with vacant rental properties to provide accommodation for one to six months. The venture was successful in Australia - formerly known as EasyRent - and helped fill temporary accommodation needs when properties were vacant. Kia kaha e hoa mā! 🙌