With more than four million hosts and 800 million guest arrivals on its platform, Airbnb has grown from a niche brand to a widely used verb. And now, following the Airbnb IPO, you can buy into the future growth of this company.
If you’ve been betting on a travel and leisure revival since the Covid-19 restrictions have been removed, here’s everything you need to know to buy Airbnb stock.
How To Buy Airbnb (ABNB) Stock
1. Open a brokerage account
To purchase ABNB, you will need to open an investment account if you do not already have an investment account. You want to focus on those with no business fees and low investment minimums. If you’re not sure where to start, check out Forbes Advisors’ list of best investment apps and best brokerages.
Most brokers and investment apps allow you to choose an account type that fits your goals. In the case of registered accounts with tax-free or tax-deferred benefits, you can select all the usual suspects or you can choose a regular taxable investment account.
For example, if you put your Airbnb stock in a tax-free savings account (TFSA), you can build your investment tax-free up to the annual contribution limit ($ 6,000 in 2022) and if you never open TFSA you can contribute up to $ 81,500 if you were born in 1991 or earlier If you were born after 1991, you have a small contribution limit, depending on your year of birth. Once you take the money you don’t have to pay tax on your TFSA income.
If you are saving for retirement, a Registered Retirement Savings Plan (RRSP) should go into your investment. It is a tax-deferred savings account that allows you to grow your investment tax-free until the last day of the 71-year-old year. At that point, you should be able to recover the income and treat it as income on your income tax.
One particular benefit of RRSPs to US stockholders is that if the stock pays a dividend, you have to pay a 30% withholding tax to the IRS (15% if you file a W8-BEN form with your brokerage), but the stock is in the RRSP, because you do not have to pay any tax on IRS RRSPs. Identifies the deferred nature. Unfortunately, they do not recognize other registered accounts, so you still have to pay withholding tax on dividends if your stock is one of the TFSA or other accounts available with an “R” at the beginning of its acronym.
On the other hand, a taxable brokerage account may not have the tax benefits of RRSPs, but they can provide greater flexibility. This is because you can deposit as much money as you want and withdraw your profits whenever you want. If you lose money on investments, you can deduct some of your losses from your taxes through tax-loss harvesting.
2. Think about how much you want to invest in ABNB
To figure out how much you can invest in Airbnb, you need to ask yourself four simple questions:
- What is your budget? Do you have enough money each month to cover your expenses — as well as at least put something into retirement and an emergency fund? If so, the rest may go towards investments such as Airbnb.
- What is the current price of ABNB? Stock prices are in a constant flux, but you can look at their recent price trends to get a sense of how much the stock may cost you. Last year, Airbnb’s shares were trading above $ 130.54 ($ 100 USD) per share. This means that if your brokerage does not offer partial stock trading, it can be expensive to load on Airbnb stock. In addition, only two discount brokers in Canada offer the option to buy partial shares – Wealthsimple and Interactive Brokers.
- What is your investment strategy? Most investors pursue one of two strategies: buying a lot at once or slowly accumulating smaller stocks over time. This latter method, known as dollar-cost averaging, allows you to invest in small increments on a regular basis and can help you pay less per share over time. This reduces the risk that you will accidentally buy a lot when prices are too high or when prices are too low.
- What about other investments? Airbnb is probably not your only stock holding, so you want to think about how it will live with the other investments you have. “Airbnb is a growth stock and still not consistently profitable,” says Matt Frankel, a certified financial planner (CFP) and senior analyst at The Motley Fool. “Therefore, Airbnb is more appropriate as part of a well-stocked portfolio for risk-tolerant investors who have the opportunity to play the investment thesis.”
3. Do your due diligence
Do some homework before buying shares of Airbnb or any stock. You want to review the company’s financial records, future plans and organizational structure to make sure you are comfortable with its strategy and confident in its capabilities.
Publicly traded companies such as Airbnb are required to submit their financial statements to the US Securities and Exchange Commission (SEC) on a quarterly and annual basis. You can review Airbnb’s annual reports and quarterly filings on its Investor Relations page or using the US SEC’s database. You can supplement these with expert analytics available through your brokerage or through third-party providers such as Globe Investor.
4. Place the order
You can buy shares by logging into your brokerage account or investment app. Then enter the Airbnb Ticker Sign (ABNB) and the number of shares you want to buy or the dollar amount you want to invest.
You may need to choose what kind of order you want to place. By default, you can probably enter a so-called market order, which means you are buying shares at Airbnb’s current price.
You may also have the option of entering a limit order, which restricts your purchase to a specific price limit. If ABNB exceeds that amount, you will not buy any shares. Limit orders can be especially helpful if you are interested in buying stock at a specific price or if you are concerned about a stock that is experiencing wild price fluctuations with your order when the price is too high.
As Airbnb trades on Nasdaq, your transactions are fulfilled during its normal business hours (9:30 am to 4:00 pm ET, Monday to Friday), unless you have access to pre-market or after-market extended hours at your brokerage.
5. Be aware of currency conversion fees
When you trade American stock from Canada, your brokerage charges a currency conversion fee when you buy and sell your stock. These fees range from 1% to 4% depending on the brokerage and are above the currency exchange rate.
You can bypass these fees by placing the money you use from US stocks in US dollars in a US dollar bank account in a Canadian bank. This way you never have to convert a currency. You can also use Norbert Gambit.
Norbert’s Gambit is when you buy an interlisted stock or ETF on American and Canadian stock exchanges. You buy Canadian shares of that stock, then you ask your brokerage to “journal over” your Canadian shares to the American list and make them American shares of the same stock. You can then sell your American stock and use US dollars to buy any American stock or ETF you want without converting the currency.
6. Monitor your account
When investing in individual stocks like Airbnb, it is best not to set things up and forget them. Instead, you want to review your investment progress from time to time.
You may want to track how its price changes over time compared to key benchmarks such as the Nasdaq 100 or the S&P 500, as well as shares in similar enterprises. Before you buy into ABNB, you should also continue to see how its financial situation changes or evolves over time by following its public filings and industry reports.
How to Sell Airbnb Shares
To sell your Airbnb shares, log into your investment account and enter the ticker symbol and the amount you want to sell.
If you are selling shares at a profit, you should consider capital gains taxes. If you stand to make significant profits (or a big loss), you may want to talk to a tax professional to determine the best ways to manage your income.
Fortunately, Canadian investors in US stocks pay capital gains to the CRA on their income tax, unless the corporation owns 5% or more of the US corporation (50% earned value) and the corporation counts its primary assets in the US. Real estate. In that case, they will also have to contribute capital gains to the IRS.
If you make $ 5 million USD or more from your US investments, you will have to pay estate tax to the IRS when you die.
Other ways to invest in Airbnb
If you love to travel or are hosting money on Airbnb, investing in a company may look like a no-brainer. But keep in mind that investing in individual stocks is incredibly risky and expensive, even for experienced traders.
That is why financial experts recommend investing most of your investment capital into index funds and exchange-traded funds (ETFs) with hundreds and thousands of stocks. This can significantly reduce your investment risk, which can cost you money.
Fortunately, Airbnb is easy to find in funds: approximately 114 ETFs own Airbnb shares, according to ETF.com, and with its recent addition on the Nasdaq 100, you will be able to gain exposure in any Nasdaq 100 fund.