How to Buy Airbnb (ABNB) Stock

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The popularity of Airbnb has transformed the way millions of travelers find accommodation. As a game-changer in the vacation rental market and a strong player in the global hospitality industry, Airbnb’s growth potential has captured the attention of investors everywhere. 

Investing in Airbnb stock could be a lucrative opportunity, but it’s crucial to approach it with knowledge and preparation. Understanding the nuances of the stock market, analyzing Airbnb's financial health and keeping up with industry trends are all vital aspects that can impact your investment.

Here's a comprehensive guide that will equip you with the essential steps and considerations to successfully buy Airbnb stock.

How to Buy Airbnb Stock

If you're decide to take a shot with Airbnb, here's how to buy the stock.

Step 1: Pick a Brokerage

Due to the rise of connectivity platforms and increasing consumer expectations for maximum efficiency and convenience, investors today are no longer limited to brick-and-mortar brokerages. Instead, many online brokerage firms offer the same access to markets and investing vehicles as traditional firms.

However, this does not mean all online brokerages are the same. While the topic of best brokers is heavily discussed, you will want to ensure that you find a platform that works best for you. For instance, most online brokers now offer commission-free trading due to rising competition. But some might offer the ability to trade options, while others do not.

Check out some of the best online brokers.

Step 2: Decide How Many Shares You Want

Before you can participate in the investment narrative of Airbnb, you must know how to buy stocks. While the process takes an adjustment, it becomes second nature almost immediately. You just need to be aware of the language that the market uses.

First, you conduct market transactions not in terms of dollar amount but by the number of shares you wish to purchase. The conversion process here is simple. Take the dollar amount you wish to spend on your desired security and divide that by its price.

For instance, let’s assume that you want to spend $1,000 on Airbnb stock. At time of writing, ABNB trades hands at $195.80. Therefore, you can purchase 5 whole shares ($1,000/$195.80 = 5.107). Please note that some brokers allow you to buy fractional shares, though not every platform offers it.

Step 3: Choose Your Order Type

In a retail market setting, you pay the listed price of a product (plus tax). In the stock market, the price almost always fluctuates. Choose your order type based on your preference:

• Bid: The bid is the highest price a buyer will pay for a stock and is always lower than the ask.
• Ask: In contrast, the ask is the minimum price a seller will accept and is always higher than the bid.
• Spread: This is the difference between the bid and ask price. Under a market order (explained below), you will execute an order at the price least favorable to you (buy on the ask, sell on the bid).
• Market order: This order type is a request to buy or sell a stock at the next available price. You are guaranteed that a transaction will go through within open session hours. However, you will lack ultimate transparency at what exact price the transaction occurs until it finishes because stocks are usually always moving.
• Limit order: This is a request to execute a trade at a specified price. The advantage is that you have maximum price transparency. However, the drawback is that the market may never reach the specified price, leaving your order unexecuted.
• Stop-loss order: The stop-loss order is a safety valve that automatically exits your holdings via a market order (sell) when it breaches a certain price threshold. Obviously, this is beneficial if you want to preserve your profits during a volatile session. The disadvantage is that if the stock opens the following day at a much lower price, you will immediately sell at or below that price.
• Stop-limit order: A stop-limit order is similar to a stop-loss order with 1 key exception: it absolutely will not sell until the market hits a specified price. In the above example regarding a stock opening at a lower price in a new session, a stop-limit order won’t execute until it reaches the price you set, giving you peace of mind. However, like a “regular” limit order, the market might not hit that price.

Step 4: Execute Your Trade

Deciding between market order and limit order depends mostly on how much you want shares at that point in time. If ABNB is moving rapidly, you may want to use a market order to ensure a position. But if you’re seeking a specific entry point, the limit order gives you transparency.

Airbnb Stock History

Airbnb does not have much of a stock history because it just made its market debut in December 2020. However, you can still see the clearly defined trend of higher highs and higher lows, emblematic of strong momentum.

Airbnb stock chart as of 8/21/24. Source: TradingView

Still, investors should carefully monitor economic data as well as any evidence of a downturn in momentum. That could signal a future downside move.

Pros of Buying Airbnb Stock

Think you might go for it? Check out reasons why you might want to:

•  Strong growth potential: Airbnb has experienced significant growth since its inception, with a business model that adapts well to changing travel preferences and emerging markets. As remote work becomes more common, the demand for unique short-term rentals may continue to increase, positioning the company for future success.
• Diversified revenue streams: In addition to its core rental business, Airbnb has expanded into experiences and activities, providing travelers with additional offerings that can enhance revenue. This diversification helps mitigate risks associated with relying solely on rental income, potentially leading to more stable earnings.
• Brand recognition and loyalty: Airbnb is a widely recognized and trusted brand in the travel industry, which can lead to increased customer loyalty. As the platform attracts an expanding range of hosts and guests, its competitive position strengthens, reinforcing its market dominance.

Cons of Buying Airbnb Stock

Still on the fence? You can point to good reasons for that:

• Regulatory challenges: Airbnb faces ongoing regulatory scrutiny in various markets, which can restrict its operations or require costly compliance measures. Changes in laws governing short-term rentals could adversely affect its profitability and growth potential.
• Market competition: The vacation rental market is becoming increasingly saturated, with new competitors emerging regularly, including established hotel chains. Intense competition can impact market share and pressure margins, potentially deterring long-term investment returns.
• Economic sensitivity: The travel and hospitality industry is highly susceptible to economic downturns, as consumers often cut back on discretionary spending during tough times. A recession or global crisis, such as a pandemic, could significantly impact Airbnb's business, leading to volatile stock performance.

An Intriguing Investment Opportunity

Investing in Airbnb stock presents a unique investment opportunity if you're looking to enter the dynamic world of travel and hospitality. As Airbnb continues to innovate and adapt in the face of evolving consumer preferences and travel behaviors, you should consider these factors carefully. By utilizing the insights shared, you can strategically position yourself for long-term growth in your investment portfolios, all while capitalizing on the expanding short-term rental market.

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