What happened
Shares of recent IPO and vacation rental website Airbnb (ABNB 1.17%) jumped again in Thursday afternoon trading, and are up 5.6% as of 1:35 p.m.
The only recent "news" we've got on the company, however, was yesterday's announcement that in an effort to be a good citizen and keep disruptive elements out of town, Airbnb is canceling all room reservations placed on its service in Washington, D.C. during the presidential inauguration period next week.
Image source: Getty Images.
So what
Reduced reservations, reduced revenue -- that hardly seems like the kind of thing that would drive Airbnb shares up, especially given that Airbnb will be reimbursing its hosts in full for the revenue they would have made renting out their spaces.
I'm afraid, then, we'll have to look for a different catalyst to explain why Airbnb shares are moving today -- but we won't have to look far. This morning, it turns out, Airbnb got an "upgrade" of sorts -- not from Wall Street analysts, but from momentum investor-bible Investor's Business Daily.
Writing this morning, IBD declared that Airbnb stock "cleared a 175.07 buy point in an IPO base" Wednesday, then fell below it, then "regained the buy point Thursday morning."
Now what
I'll be honest with you, folks: I don't speak "trading technicals" and none of what IBD said means very much to me. The gist, though, seems to be that Airbnb stock is moving higher, and therefore should be bought -- which would make it move even higher, which would mean it should be bought again, I suppose, in a sort of self-fulfilling prophecy.
That doesn't make a whole lot of sense to a value investor like me. (Doesn't a stock going up mean it's getting more expensive, and less of a bargain?)
What does make sense, though, as I pointed out earlier this week, is that Airbnb is still doing $1.3 billion a quarter in business renting rooms to folks in the middle of a pandemic -- and earning a profit in the process. That speaks to the strength of this business more than any technical momentum reading can, and it's a better reason to buy Airbnb, to boot.
