While the ongoing coronavirus pandemic has done a lot to dissuade potential companies from going public, there still were a fair number of major initial public offerings (IPO) for traders to speculate on. Two of the most notable so far this year include AirBnB (NASDAQ: ABNB) and DoorDash (NYSE: DASH). Both companies saw their share prices surge earlier last week when they went public as investors reacted to the excitement. However, it seems the buzz might be fading off quicker than expected. Two Wall Street analysts downgraded both of these two companies yesterday. As it turns out, both cite similar reasons for their decisions.
One independent financial analyst, Gordon Haskett, ended up downgrading AirBnB from a “buy” to a market “underperform” on Monday, completely reversing his once optimistic appraisal of the company. He went on to argue that the company’s valuation is stretched thin after the stock more than doubled last week on a hectic day of trading.
Haskett went on to say that he expects Airbnb to trade closer to around $103 per share, much less than the $130 it’s currently trading around at the moment.
Elsewhere on Wall Street, analysts from DA Davidson ended up downgrading DoorDash to a “neutral” from a previous “buy” rating. While still a bit better than the pessimistic assessment Haskett gave for AirBnB, analysts at DA Davidson also think that DoorDash is very highly-priced.
They added that DoorDash’s leadership in the food delivery market over its rivals, as well as its strong management team, definitely makes the stock seem like a decent investment on paper. It’s just that they’re fidgety about how high it’s trading at the moment. The DA Davidson analysts boosted DoorDash’s price target from $93 to $150, which is still a noticeable downgrade from where it’s currently trading at.
DoorDash’s main competitor at the moment is Uber eats, which is trying to muscle into this area but is having some difficulties. In comparison, AirBnB has relatively little in the way of major competition.
In response to the news, both companies were down around 10%, taking into consideration pre-market trading. While it’s uncertain whether or not these two separate analyst downgrades will do much damage to both company’s stock prices, hot IPOs often tend to “burst” after a period of excitement. As of right now, most analysts covering either of these two stocks are either neutral or bearish on their short-to-mid-term stock prices.
Doordash Company Profile
DoorDash Inc provides online food delivery logistics services. The company provides on-demand food delivery services through its website. It operates primarily in the United States of America. – Warrior Trading News
AirBnB Company Profile
Started in 2007, Airbnb is the world’s largest online alternative accommodation travel agency, also offering booking services for boutique hotels and experiences. Airbnb’s platform offered 5.7 million active alternative accommodation listings and 247 million guest arrivals in 2019. Listings from the company’s 4 million hosts are spread over 220 countries and 100,000 cities. In 2019, 41% of revenue was from the North American region, 40% from Europe/Middle East/Africa, 12% from Asia-Pacific, and 7% from Latin America. Transaction fees for online bookings account for all its revenue. – Warrior Trading News
