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How Did These 2 Hot Nasdaq Stocks Miss the Rally Monday?

By Dan Caplinger - Mar 1, 2021 at 3:00PM

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Even on a big up day, some surprising companies can get left behind.

The stock market was in full rally mode to start off the month of March, and the Nasdaq Composite (^IXIC 0.00%) was a big beneficiary of the bounce from last week's pressure. As of 2:30 p.m. EST, the Nasdaq had climbed nearly 3%, leading other major market benchmarks higher.

As you'd expect on a bullish day, nearly every major stock in the Nasdaq was higher, and even those that weren't generally didn't post notable declines. Yet two stocks in particular stood out for giving up ground today -- all the more so because their prospects look just as good now as ever. Let's look more closely at Airbnb (ABNB 0.65%) and Dream Finders Homes (DFH -2.25%) to see what, if anything, kept them on the sidelines of Monday's bull market move.

Losing air

Airbnb shares were down 4% Monday afternoon after having been down as much as 7% earlier in the day. The newly public online travel company has gotten a lot of fanfare from investors in its first few months of trading, but it seems that some shareholders are worried about just how far the stock has climbed.

Person opening curtains in a room with a bed and gift box.

Image source: Getty Images.

Part of today's bullish market sentiment came as a result of new coronavirus vaccines getting approval from the U.S. Food and Drug Administration. That's leading to hope that the travel industry could recover sooner rather than later, and surveys of consumers are increasingly finding that people want to travel this year -- and they're willing to pay up to do it.

That news should be welcome for Airbnb, because its asset-light business model charges fees based on the value that hosts charge their customers. With most hosts paying 3% service fees while most guests pay as much as 14.2% for their end of the transaction, Airbnb's revenue climb was largely in direct proportion with spending volume on the site.

Airbnb jumped from its IPO price, so some are wary that the stock and its $120 billion market cap are too large, too soon. Even so, the company has a strong future ahead of it, and that bodes well for long-term stock performance.

Is the dream fading?

Elsewhere, shares of Dream Finders Homes were down more than 4%. The stock isn't exactly a household name, but what makes today's drop surprising is that it comes in the face of a big gain for one of its largest shareholders.

Dream Finders Homes is a homebuilder that uses an asset-light business model, buying land on a just-in-time basis once a homebuyer has already committed to a purchase. It recently came public, and one of the big winners in the IPO was conglomerate Boston Omaha (BOC 1.22%), which in turn has Warren Buffett grand-nephew Alex Rozek as its co-CEO.

The irony here is that Buffett's own comments over the weekend were a big part of the reason for the market's rise, and Boston Omaha shares also got a big boost. Yet even with that optimism -- and despite the fact that several rival homebuilders are up today -- Dream Finders isn't getting any love from Wall Street on Monday.

Don't make too much of daily moves

Even when the stock market is sharply higher, solid stocks can still lose ground. It's important not to read too much into what's happening with Dream Finders Homes and Airbnb on Monday. Even if they fall on a big up day for the market, that doesn't mean they won't produce stellar returns in the long run.

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Stocks Mentioned

Airbnb, Inc. Stock Quote
Airbnb, Inc.
$113.28 (0.65%) $0.73
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,354.62 (0.00%) $0.00
Boston Omaha Corporation Stock Quote
Boston Omaha Corporation
$20.71 (1.22%) $0.25
Dream Finders Homes, Inc. Stock Quote
Dream Finders Homes, Inc.
$16.50 (-2.25%) $0.38

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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