What happened

It was a year of hills and valleys for Airbnb (ABNB 3.64%), the leader in the short-term housing rental space. At several points in 2021, the stock was on pace to outperform the S&P 500.

Although the broad market index would go on to post an increase of 27% for 2021 -- more than twice its historical average annual gain -- Airbnb would end up 13.4% higher, according to data provided by S&P Global Market Intelligence. Not a shabby performance by most standards, but not quite as chic as the benchmark index.

Family unpacking luggage from a car

Image source: Getty Images.

So what

Airbnb entered 2021 with high hopes. The prior year had been ruinous as COVID-19 pandemic lockdowns canceled most travel and virtually eliminated people's desire to stay in unknown accommodations.

But the arrival of effective vaccines against the coronavirus presented the hope of a reopened economy. By mid-February, Airbnb's stock had already rocketed to a 50% gain as travelers began to spread out across the country again and tourists flocked back to popular destinations. Postponed trips were rescheduled. Yet outbreaks of the more virulent delta coronavirus variant disrupted many of those plans.

While state and local governments in the U.S. generally did not deploy new lockdown orders, strict mask and vaccine mandates were reimposed in many locations, and the surge in new COVID-19 cases created significant uncertainty about whether the U.S. and global economies were about to plunge again.

By the middle of the year, Airbnb shares were trading hands at prices well below those they had attracted just four months prior -- as of July 1, the stock was up less than 6% for the year. But around that time, it became clear to investors that the economy wasn't going to shut down again and the short-term rental specialist rallied once more.

Then omicron hit, and while the new variant appears more apt to cause milder illnesses and lead to fewer deaths, its even greater transmissibility and greater ability to infect even vaccinated people were concerning.

Couple looking at a map

Image source: Getty Images.

Now what

As the pandemic enters its third year, people's concerns over the ongoing omicron-driven surge -- which has pushed new case numbers to record highs in many places -- are weighing on Airbnb's stock.

When the Centers for Disease Control and Prevention is flatly warning consumers -- even those who are vaccinated -- not to take cruises because of shipboard outbreaks, it's understandable why investors are seeing a dark cloud hanging over the entire leisure industry.

Yet the markets seem to realize Airbnb is resilient. There are nearly 130 million households in the U.S., and more than 1.5 billion households globally, meaning there is a world of opportunity for the hospitality leader to grow as we learn to live with the ever-present threat of the coronavirus. And Airbnb is entering into longer-stay rentals, too -- 90% of its active listings now accept them -- providing the company a new and potentially lucrative channel in which to expand.