David McWilliams: The Airbnb mania gripping Silicon Valley and Wall Street has me worried
As its share price neared $140, I was reminded of the ‘canal mania’ of the late 1700s
The Nasdaq building shows the Airbnb logo to mark the company’s initial public offering on the stock exchange in New York. Photograph: Justin Lane/EPA
When interest rates are low and capital easy to come by, the valuation of assets can be out of kilter. Take Airbnb. Last week it was floated on the US stock market. The company was hoping that the shares might trade at about $60 (€49) a share. This week it was traded at just shy of $140 a share. Twice what the company valued itself at.
Earlier this year, as travel stopped, people in the know suggested that the company should trade below $30 a share. Today this company, which has yet to make a profit, is valued at $85 billion. Remember that behind all the hype, Airbnb can’t make a profit, so how can it have such a huge valuation?