After years of tireless work and endless discussion about their initial public offering (IPO), Airbnb was finally listed on the NASDAQ yesterday and had its very first day of being traded on the stock market.
As with any IPO launch, there was an explosive degree of hype and fury in both the financial markets and the news. Let’s take a look at what happened…
Airbnb (ticker: ABNB) was priced the night before at $68/share and closed at $144.71/share. Literally went straight up for the entire day and reached a high of $163.80/share at 1:45pm EST before slightly declining and reaching a plateau.
Airbnb’s shares were at $144.71 by market close, which translates to a 112.81% gain within a single day of trading. If we do the math, that means the total valuation of the company now sits at over $100 billion.
Within less than 24 hours, their market cap of $86.5 billion is equal to that of their rival competitor Booking Holdings. And it’s a lot more than other big-name travel companies such as Uber ($96 billion), American Airlines ($11 billion), and Hilton Hotels ($30 billion).
As for the founders? Well, their fortune has doubled and each of them now have a net worth of over $10 billion. This was a HUGE pay day for them.
But ZeroHedge is quick to point out that this seemingly miraculous day isn’t all sunshine and rainbows, noting some of the many problems the travel company faced due to the COVID-19 pandemic:
“The company is going public at a time when the sector has been hammered by the pandemic, though Airbnb has made itself available to customers looking for convenient ‘stay-cation’ homes, where they can get away from the din of city life for a bit.
The company’s revenue shrank nearly 19% last quarter to $1.34 billion vs the prior year as the pandemic killed the travel and hospitality industry. Still, the company managed to turn a profit thanks largely to customers fleeing the city.
…The company put its IPO plans on hold back in March as the pandemic ground global travel to a halt. By April, room bookings had plunged 72%. Airbnb rolled out a blanket refund policy and doled out more than $1 billion in cancellation fees.”
MarketWatch joined in to, although this little fact was buried in the middle of their article amidst a sea of praise:
“Chief Executive Brian Chesky said the company had intended to go public earlier this year, before the COVID-19 pandemic lockdowns destroyed travel — and 80% of its business — and it was forced to cut costs drastically, including laying off about 1,900 people, or 25% of its workforce.”
As with every IPO launch, tread cautiously. Today was a miraculous gain for the day traders who bought shares at the start of the market and sold them by the end of the day.
But for the long-term investors, don’t let the euphoria get to your head. IPO launches are notorious for having all of their gains quickly erased and it’s entirely possible this IPO ends up being a brief glimpse of light in an otherwise dark sky of clouds.
Wait and see. That’s all I have to say for now.
What do YOU think about Airbnb’s IPO launch? Will this company sustain their positive gains, or will their stock quickly tank to the ground? Reply to this newsletter and share your predictions with us!
An Awfully Quiet Day for the Stock Market. Perhaps TOO Quiet…
While everyone was obsessed over the public listing of Airbnb on the NASDAQ, the rest of the stock market was fairly quiet. Looking at yesterday’s market performance, it was one of the least productive days we’ve had in a while:
- S&P 500: -0.1%
- Dow Jones: -0.2%
- NASDAQ: +0.5%
- Tech stocks: >+1% for Apple and Netflix
The slight gain in NASDAQ makes sense, but It seems as if the rest of the market is in a paused state.
We still don’t have any clue what’s going to happen with the second stimulus package. Democrats and Republicans are still fighting about the finer details, and all we get are generic soundbites about how things are “going great” and “progress is being made.”
Plus, it’s still entirely possible for the government to fail in their efforts to extend the shutdown from today afternoon until December 18th.
Aegon Asset Management chief macroeconomics strategist Frank Rybinski had this to say about yesterday’s trading conditions. From CNBC:
“’The markets are already discounting a smoother vaccine rollout and stimulus; if we don’t get stimulus by the end of the year… you could definitely have a risk-off move in the market.
…use those declines as buying opportunities as the economic outlook starts to improve for the second half of 2021.”
Until we get some significant news about the FDA approving Pfizer’s COVID-19 vaccine, or the government shutdown, the market is quietly waiting for the next big piece of economy-changing news…
An EXTRA 137,000 Jobless Claims from Last Week – What’s Going On?
Another explanation for the slight decrease across the Dow Jones and S&P 500 in yesterday’s trading session could be the awful news coming from the Department of Labor. Breitbart reports with the latest update:
“New weekly jobless claims jumped 137,000 to 853,000 in the week that ended December 5, the Department of Labor said Thursday. That is far worse than expected.
Economists had forecast 724,000. The prior week was initially estimated at 712,000, the first decline after two weeks of rising claims, and was revised up to 716,000. Many economists think that decline was due to the Thanksgiving holiday, when many employers hold back from laying off workers and some workers do not bother applying for benefits until after the holiday.”
To put these numbers in context, we haven’t hit the 800,000 mark since October and this is a new high in jobless claims since September.
According to Dory Wiley, CEO of Commerce Street Capital: “Timing the market is not always well-advised and paring back can miss out on some gains the next two months, but after such good returns in clearly a terrible fundamentals year, I think taking some profits and moving to cash, not bonds, makes some sense here.”
Perhaps the gains we’ve made were too good to be true. It might be the case that several high-profile companies are ridiculously overvalued and we are headed towards an inevitable correction. I can’t say for sure what’s going to happen, so we’ll have to wait and see what fresh news awaits us today…
Is WeBull Stealing Clients from Robinhood?
I’m often reminded of an old quote from billionaire Mark Cuban: “Work like there is someone working 24 hours a day to take it away from you.” In other words, don’t get complacent. Because some random kid in his basement is scheming of a way to overtake you and become the new king of the hill.
Robinhood should take this quote into consideration, considering that competitor WeBull (owned by China) is getting ready to take away some of their unhappy clients. From ZeroHedge:
“The company’s users seem to be satisfied for the time being. The platform is being called a mix between Robinhood and Interactive Brokers – subject to less criticism that it is making trading into a ‘game’ than Robinhood’s friendly UI draws. [American CEO] Denier said the ‘vision that we’ve had from the beginning [is] let’s not oversimplify and gamify this.’
…Its typical client is in their 20s or 30s and has about $3,200 in their account, BBG notes. It sees about 850 incoming transfers a day from other brokerage accounts. Some traders switched over after Robinhood’s consistent outages this year. Some are also wooed by the fact that WeBull has live customer service via a hotline, where Robinhood doesn’t.”
And the most damning statement?
“It starts out where they kind of have both accounts. They might even execute on Robinhood and do research on Webull, but eventually we tend to win them over”
If I was the CEO of Robinhood, I’d be sh*tting my pants right now. I would pause everything, figure out what the hell is causing me to lose clients, and address everything immediately. Problems like these, when left unresolved, eventually turn into inevitable doom.
Remember what happened to Blockbuster when they refused to take Netflix seriously? If you do, you can start to see the writing on the wall for Robinhood if they don’t fix their platform.
A New Way for Hackers to Access Your Credit Card Data
Nowadays, people are making in-store purchases with their credit card. Whether they put the card in to enter their PIN number or use the tapping system, everything possible is being done to avoid all forms of human contact and touch.
But according to cybersecurity researchers Aleksei Stennikov and Timur Yunosov, it would take a hacker all of five minutes to steal credit card data from major point-of-sale payment companies Ingenico and Verifone. Forbes reports on this story with more details about how this “hack” is possible:
“…they used default passwords that let anyone with physical access through to a ‘service menu.’ These menus contained functions that could be abused to write malware onto the terminals. The malware could then hoover up credit card numbers once the device was in use again.
…An attacker would have all the information they required to clone cards and start stealing people’s money… it would take between five and ten minutes to connect to the devices via USB and install the malicious card sniffer.
One of the vulnerabilities could also have been exploited over the internal network, so if a hacker found a way onto a shop’s IT systems they would have a way to install malware on the terminals to start pilfering credit card information.”
Naturally, spokespeople from both companies vehemently simultaneously denied the existence of vulnerabilities in their system while promising to address any security issues going forward (if they haven’t already).
But you should be on guard for credit card hackers and thief going forward. Guard your information very closely and be wary of suspicious merchants who don’t have every security measure installed to keep your private data safe.
Imagine Making +$150,000/Year And Feeling “Poor”
Don’t be fooled by the people who are making low six-figure incomes per year. They might have a lot of money, but they’re not always KEEPING that money. According to CNBC, this upper-middle-class phenomenon is especially prevalent in Georgia:
“Courtney Mishoe and her husband are making more than $180,000 a year, three times as much as the median annual income in the United States. Still, the suburban Georgia couple doesn’t ‘feel wealthy’… ‘I don’t have a bunch of money stashed away anywhere,’ Mishoe says.
The Mishoes, who have a mortgage and three kids, live in North Fulton, an area where homes sell for $500,000 to $800,000 and property taxes are relatively high.
They aren’t the only residents earning six figures and struggling to set aside money for retirement, college and other major expenses. Some living in the area who earn $100,000 ‘are living paycheck to paycheck,’ the Post reports, and even families earning up to $250,000 ‘don’t consider themselves to be high-earners.’
And get a load of this damning quote from a financial adviser, who spoke to The Washington Post before CNBC published their analysis of the original story:
“Some of them are living paycheck to paycheck… You would imagine that people are fairly well-to-do even with $200,000. But they don’t consider themselves to be rich. It’s challenging.”
I personally think this story is laughable, but it really goes to show you how lots of money doesn’t always correlate with financial wisdom.
What do YOU think about this phenomenon? Is this a real problem for the upper middle-class who suffers from higher tax rates, or is it just widespread financial irresponsibility? Share your thoughts with us by replying to this newsletter!