Pros & Cons of Investing in Airbnb
From the 11ish archive: written in December 2020. Prices, numbers and views are from then and are not investment advice today.
Airbnb will finally be a publicly traded company! As far as IPOs go, there were three companies that I’ve been excited about this year, one of which I can’t talk about due to conflict of interest and the other two are Unity and Airbnb.
A lot of these news outlets and tubers, all they talk about is how exciting it is to see IPOs surge 50, 90, even 3x its listing price. But if you’ve been following my channel, you know I’m going to reel you in and pull you down to earth.
Yes, I am freaking excited about Airbnb’s public offering even though they’ve refused to hire me multiple times, but I’m about to talk about why it’s a worthwhile investment because of its unique business value and then I’m going to talk about some potential risks if you invest in such a hot pancake.
So Airbnb. The company with founders whose entrepreneurial spirit I can only dream of. By the way if you haven’t already, go check out the How I Built This podcast for Airbnb. It’ll for sure tickle your pickle.
What is Airbnb’s Business
The company that has made couch surfing culturally acceptable.
The company that brought access to millions of locations that would NOT have been accessible otherwise, all built on a bit of money and a glorified version of a social contract that I get to sleep at your place on the cheap if you promise not to fajita it up.
Of course it’s a bit more complicated than that, but it is absolutely amazing and the best thing since sliced bread. If you are on vacation with your lover and looking to stay in a posh high-rise 3 blocks from Times Square, they’ve got it. If you are hitchhiking solo and want to spend 25 bucks a night at some grad student’s dorm because you don’t speak German and don’t know how Berlin works, you can do that and come out unscathed.
Serious Pro Considerations
Airbnb has done a great job of making me feel like no matter what and where I look for a place to stay, I get a reasonable representation of it in its marketplace, and decent experience onsite. They make it a point to educate listers on being a good host and it clearly shows.
I’ve got scores of amusing personal stories that make me want to book Airbnb time and time again.
They’ve been growing leaps and bounds with VERY little real competition and now they even offer unique experiences to go along with your bookings. Because ultimately that’s why you’ve booked Airbnb right? You were looking for a unique stay, so why not supplement it with a unique experience too? I remember staying in New York for the weekend, and it was recommending that I book a boxing lesson with a local female champ or learn standup comedy from a local bum. How freaking sick is that?!
Yes, with COVID Airbnb and its hosts have suffered, but this kind of business has relatively low risk, because it’s the hosts holding on to most of the fixed costs, not the platform. So at the end of the day, Airbnb will come back and grow stronger and stronger, because there will ALWAYS be people looking for a deal.
Investment Risks
Now the biggest risk I see with Airbnb is regulations. It’s fajita-ing with the multi-billion dollar hotel industry so naturally they’re going to pay cities to fight. This has been happening all over the place and it’s very unpredictable how it’s going to come out in the end. The next step we’ll probably see are hosts trying to form unions. You can basically look at what’s happening with Uber and for the most part get an idea of what might happen to Airbnb.
The second risk is growth. What CAN Airbnb do next to continue their explosive trajectory? What is in their business pipeline? I foresee more partnerships with unique experiences and maybe hotels and airlines. Because it’s econ 101, man, that when you bundle product offerings right, you will upsell and make a lot more money. With the fact that Airbnb’s competitors are a lot more niche and a lot smaller, I think they have plenty of time to figure this out for the long term. For the SHORT TERM though, it is slightly risky, just because I’m not quite sure how much worse COVID is going to get and how it will affect all of these types of business.
I can tell you I know people who have been locked up for so long that they decided to book an Airbnb close by just to have a change of scenery. Will that continue to be allowed? We’ll see.
The third risk is that I think Airbnb is SLIGHTLY a ticking time bomb for lawsuits. The reason I say this is probably 50% of what I booked on Airbnb were in places that didn’t actually allow Airbnb. You’d be surprised by the number of times I showed up to the Airbnb address to a chained door, and then they message me telling me what the real address is… Just sayin’.
The last risk is timing. Time and time again I say this, but it just is, man. You’ve got NYU professors saying the same thing on their YouTube channels too. The market is frothy as fajita so you’re paying a premium on any stocks right now. That being said, if you plan on holding this stock for 4 to 5 years, then most likely the premium will be insignificant compared to the gain you’d get in the end.
For me, though, I’m like a 5 out of 10 on the risk aversion scale, so I’m going to probably go in, but go light on my initial investment.
Interesting Reads:
https://www.theguardian.com/technology/2019/may/05/Airbnb-homelessness-renting-housing-accommodation-social-policy-cities-travel-leisure#:~:text=Eleven%20years%20on%2C%20Airbnb’s%20site,half%20a%20billion%20since%202008.
Disclosure: As of October 3, 2026, the author does not hold ABNB. No payment was received for this post. This is commentary from December 2020, not investment advice.
