What happened
Shares of Airbnb (ABNB -0.85%) rose 4.8% on Tuesday as the broader market got off to a strong start in the morning. Some investors may also have paid attention to comments from Truist Securities analysts pointing out that hybrid working could add $54 billion in bookings for travel agencies like Airbnb.
But by mid-afternoon, the stock had given up some of those early gains as investors continued to worry about the state of the US economy. The stock was up 2% at 2:48 p.m. ET.
So what
Investors started the day in a generally optimistic mood. This may be due in part to comments by the President of the Federal Reserve Bank of Chicago, Charles Evans, who said during a interview on CNBC that he wondered if the Fed was raising rates too quickly.
Image source: Getty Images.
“We’ve done three 75 basis point increases in a row and there’s more talk to get to that 4.25% to 4.5% by the end of the year, you don’t leave a lot of time for watch every monthly release,” Evans said.
That left many investors with a bit more hope that the Fed might reduce its pace of interest rate hikes.
Airbnb investors not only took those comments on board, but also addressed the fact that analysts at Truist Securities believe hybrid work and remote working could continue to drive weekend travel.
Analysts said in a note to investors on Tuesday that the trend could add another $27 billion to short-term accommodation bookings — compared to pre-pandemic levels — of which about $18 billion goes to accommodation companies. accommodation, including Expedia, Reservationsand Airbnb.
Additionally, analysts said that over the long term, this increased demand could unlock up to $54 billion in U.S. bookings.
Now what
While Airbnb shares were still in positive territory for the day at the time of this writing, it was clear by mid-afternoon that some of the earlier upbeat sentiments were fading. It’s probably because the whole market started to slide, pushing the S&P500 and the Nasdaq Compound back into negative territory.
Investors fear that the Federal Reserve will maintain its pace of aggressive rate hikes and possibly tip the US economy into a recession. These fears led to five consecutive days of declines in the market.
Airbnb shareholders can likely expect more volatility as investors try to gauge the impact of the state of the economy on the company. But investors should remember that buying stocks of big companies and holding them for five years or more is the best way to avoid making investment decisions based on fear.
chris snower has positions in Airbnb, Inc. The Motley Fool has positions in and recommends Airbnb, Inc. and Booking Holdings. The Motley Fool has a disclosure policy.
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