Why Airbnb shares were volatile today

What happened

Shares of Airbnb (ABNB -1.15%) fell this morning after the latest inflation data showed consumer prices rose more than expected in September.

This bad inflation news caused S&P500 fall 0.6% and heavy technology Nasdaq Compound fall 1.2% this morning, pushing the travel gear down 6.3% at the start of the trading day. Airbnb shares rebounded slightly and were down 1.3% at 11:19 a.m. ET.

So what

The Bureau of Labor Statistics released its latest inflation today’s data showed consumer prices rose 0.4% in September, higher than the 0.3% analysts had estimated. On an annual basis, consumer prices rose 8.2% and remain at a nearly 40-year high.

Image source: Getty Images.

This sent stock indexes plummeting today, and Airbnb shares were not spared. Airbnb investors are concerned that the latest inflation data could encourage the Federal Reserve to potentially raise the federal funds rate by 75 basis points at its next two meetings (which will take place in November and December).

Continued aggressive interest rate hikes could end up slowing the U.S. economy significantly — even triggering a recession — and Airbnb investors fear a slowdown could dampen consumer spending on travel.

Now what

Airbnb shares have been battered along with many other stocks and have fallen 36% in the past 12 months.

While a recession could certainly dampen consumer spending on travel, the company has already weathered tough times with COVID-related shutdowns and come out the other side with its travel company firmly intact.

There could be more short-term pain for inventors as they process the latest inflation data and the Fed’s response to it, but this travel stock could still end up being a good long-term investment if he can handle the latest difficulties as he did during the height of the pandemic.

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