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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Airbnb shares surge on opening day’s trade, as Wall Street’s IPO euphoria continues

The first day of trade for home rental company Airbnb has gone off with a bang. After listing its initial public offering at US$68, the company’s share price surged 113% in Wall Street trade overnight, to close cash trading at US$144.71 per share. The company currently has a total market capitalization of US$86.5 billion.

Airbnb’s extraordinary launch into public markets extends the trend of extraordinary buying activity for newly floated companies on Wall Street this year. Despite the Covid-19 crisis, and a relatively high volatility environment, highly accommodative financial conditions have seen new floats thrive, with American food delivery company DoorDash floating a day earlier, and recording a similar surge in its share price in its first day of trade.

Questions about the companies current fundamentals have been asked by sceptics of Airbnb’s rally, who’ve diminished it as a reflection of a euphoric market driven by retail investor speculation. However, there remains a strong fundamental thesis for investing in Airbnb amongst market participants. The company is seen as a disruptor to traditional holiday accommodation, with a far more flexible and resilient business model, that’s manage to weather the Covid-19 crisis better than its competitors.

How Airbnb navigates its new life as a publicly listed company will be the core interest for the market now, as the mania of its IPO fades. A lot will depend in the short-term on how the global economy normalizes and recovers from the Covid-19 crisis, as restrictions on domestic and international travel across the world continue to inhibit the profitability of companies sensitive to travel and tourism.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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