After reporting better-than-expected earnings last week, Airbnb stock has been falling, but it may be due to something else entirely.
Last Thursday, Airbnb (NASDAQ: ABNB) revealed that Q1 revenue grew 5%, gross booking value rose 52%, and bookings jumped 39%.
So why on earth is its stock down 6% today?
Nothing to see here folks…
When you see that big gaping red hole in your portfolio it’s always a concern, but in Airbnb’s case, there’s nothing to be immediately alarmed about.
Its stock is down due to the end of the company’s lock-up period.
Simply put, a lock-up period is a predetermined amount of time following an initial public offering where large shareholders, such as company executives and investors representing considerable ownership, are restricted from selling their shares.
In this case, it was 180 days, which are now up. And so, Airbnb was among Wall Street’s five most-traded stocks yesterday with about $3.3 billion worth of shares bought and sold, compared with an average of under $1 billion a day over the past 20 sessions.
With its stock up more than 90% from its IPO price, it’s not surprising that executives want to cash in on some of their profits. Investors should be worried if high-level executives were dumping their entire positions, as this would imply a loss of faith in the company’s potential. For now, we do not have specifics about who sold what, but so far there has been no major panic and its stock price is rising pre-market.
For now though, it’s good to remember that Airbnb has weathered the COVID-19 storm very well, even posting a profit in Q3 last year. What’s more, it expects business to grow exponentially as vaccinations increase and economies reopen.
For now, Airbnb bulls can take this ‘normal’ dip as a chance to get some shares at a discount.
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