Why Airbnb shares fell on Wednesday

What happened

The weather and the summer tourist season are heating up, but you wouldn’t know that from the performance of Airbnb (ABNB 0.63%) stock on Wednesday. Shares of the flagship home accommodation specialist fell nearly 4% following a sharp drop in an analyst’s price target.

So what

Doug Anmuth, of JPMorgan Chase JP Morgan unit, had a busy Wednesday. In addition to reassessing a set of tech stocks under his cover, he also took aim at several with a strong online presence. With Airbnb, it cut its price target quite drastically to $110 per share from its previous level of $185.

Anmuth’s reasoning was not immediately apparent. By setting price targets at other tech and tech-adjacent titles, however, the analyst said major internet stocks are entering a period of weaker, more mature growth during which they will be more subject to macroeconomic headwinds. With the global economy expected by many to be facing a slowdown, these companies will be affected.

Investors may also have been concerned by Airbnb’s latest move to limit parties at properties rented through its system, foregoing revenue from that activity. On Tuesday afternoon, Airbnb announced that it was permanently banning rentals for these purposes. He originally declared a temporary ban in August 2020; this is now a permanent company policy.

Now what

Many signs point to a summer season banner for the the travel industry. Many people used to the pandemic lockdown have managed to save some cash and are now eager to spend it scavenging the camp from home and around the world.

In the case of Airbnb, I think Anmuth’s concerns are overblown and the price target has been a bit steep; the company stands to benefit greatly from these current travel trends.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has no position in the stocks mentioned. The Motley Fool holds posts and recommends Airbnb, Inc. The Motley Fool has a disclosure policy.

Comments are closed.