Airbnb Is Named to the S&P 500 Index (September 2023)

From the record. This is a look back at September 2023. The desk wrote it on 11 October 2026 from sources published at the time; Stay Gazette opened in July 2026 and did not report this as it happened.

On 1 September 2023, S&P Dow Jones Indices said Airbnb would be added to the S&P 500, the stock index that large index funds follow. The change was set to take effect before the open of trading on Monday 18 September 2023. Airbnb was to replace Newell Brands. Blackstone, named in the same release, was to replace Lincoln National.

Airbnb's shares rose 5% after the announcement, ETF Stream reported. The release itself said nothing about fees, payouts or rules on the platform. It was a notice about which companies would sit in four indexes. The company's filings were another matter: they set out, in plain numbers, how its good year looked from a host's side of the marketplace.

What S&P announced

The release, dated 1 September 2023 in New York, listed changes to the S&P 500, the S&P 100, the S&P MidCap 400 and the S&P SmallCap 600, all timed to the quarterly rebalance. Its table listed Airbnb, ticker ABNB, under Consumer Discretionary. Newell Brands and Lincoln National were to move down to the SmallCap 600. S&P gave one reason for the whole list, which was to keep each index representative of its range of company sizes. It gave no reason specific to Airbnb.

Bloomberg, which said the release came late that Friday, noted that Blackstone would be the first alternative asset manager in the index. In the same release Tripadvisor was listed to move the other way, out of the MidCap 400 and into the SmallCap 600.

What had changed since the IPO

Airbnb completed its initial public offering on 14 December 2020, at $68.00 a share. In 2021, ETF Stream reported, S&P Global Market Intelligence had named it among seven companies valued above $50bn that had not been admitted to the S&P 500. S&P's published rules and Airbnb's own filings showed two things that were different by September 2023.

The first was profit. S&P's methodology, in the edition dated July 2023, asked that a company's GAAP earnings over its most recent four quarters add up to a positive number, and that the most recent quarter be positive as well. Airbnb's annual report called 2022 its first profitable year: net income of $1.9 billion, after a net loss of $352.0 million in 2021. On size, the floor for a new S&P 500 member from 5 July 2023 was a market capitalization of US$14.5 billion, raised from US$12.7 billion.

The second was the share structure. Until 17 April 2023, S&P's rule was that companies with multiple share class structures were not eligible for its main indexes. Companies with such structures that were already members had been allowed to stay since 31 July 2017. Davis Polk, a law firm, wrote in April 2023 that the exclusion dated from that day and followed lobbying by the Council of Institutional Investors and others after Snap's offering of non-voting shares. On 17 April 2023, S&P announced that companies with multiple share classes would be eligible again, provided they met every other test. It said the change affected only future candidates.

Airbnb had four classes of common stock. Its annual report gave Class A shares one vote each and Class B shares 20, with no votes for Class C and Class H. As of 31 December 2022, holders of Class B stock owned 34.8% of the company's capital stock and commanded 91.6% of its voting power. The founders together held 73.9% of the votes. The class listed on Nasdaq under the symbol ABNB, the symbol in S&P's table, was Class A.

How the market took it

Three outlets measured the reaction at three different moments. ETF Stream put the move after the announcement on 1 September at 5% for Airbnb and 4.1% for Blackstone. CNBC reported on Tuesday 5 September that Airbnb was up more than 4% before the market opened, and said the index funds that tracked the S&P 500 could put buying pressure on the stock over the following weeks. That afternoon, at 2:46 PM, Schaeffer's Investment Research had the shares up 8% at $143.37, and up 67.7% for the year to date.

That Tuesday was also the day New York City began enforcing its short-term rental registration law, which Airbnb's annual report had named to investors as a law that limited the properties able to host short stays in the city.

ETF Stream added a caution drawn from a report by Research Affiliates. In its account, Tesla entered the S&P 500 in December 2020 and then trailed the stock it replaced by more than 70% over the next six months.

The same numbers from a host's side

The most recent quarter on the books when S&P made its announcement had been reported on 3 August 2023. Revenue was $2.5 billion, up 18% from a year earlier. Net income was $650 million, a margin of 26% against 18% a year before. The company said it had bought back $2.5 billion of its Class A stock over the trailing twelve months. “Our Q2 results show the desire to travel and host on Airbnb remains strong,” Brian Chesky, the co-founder and chief executive, said in the statement that came with the results.

Gross booking value, which Airbnb defined as the dollar value of bookings including host earnings, service fees, cleaning fees and taxes, was $19.1 billion, up 13% from $17.0 billion. Nights and experiences booked passed 115 million, up 11%.

Supply grew faster than either. Active listings rose 19% in a year to more than 7 million, and Airbnb said it had added more net listings than in any earlier quarter. It also told shareholders that since its Summer Release more hosts had taken up its discounting tools and lowered their prices. In its quarterly filing the company stated the dependence in one line: its business model, it said, rested on hosts and guests succeeding.

A market report published that month showed how the summer had gone for operators in the United States. Key Data, as reported by Short Term Rentalz on 13 September 2023, found that revenue per available rental for stays in June, July and August fell 14.1% to $115, or 16.8% after inflation. The average daily rate fell 8.1%, from $328 to $302, and paid occupancy fell 6.5% to 38%. Those figures covered the whole US short-term rental market, not Airbnb alone. “It’s likely that the cost-of-living crisis, coupled with an increase in short term rental supply, has hurt revenues this summer,” said Jason Sprenkle, Key Data's chief executive. He also said he expected the US to improve in 2024.

The Gazette Verdict, looking back

Being named to the S&P 500 was a reward for Airbnb's shareholders, and hosts had no reason to read it as good news for themselves. The profit S&P's rules ask for was there: $1.9 billion in 2022 and a 26% net margin in the second quarter of 2023. Over twelve months Airbnb bought back $2.5 billion of its stock. The same results showed listings growing 19% while nights booked grew 11%, and Airbnb told investors more hosts were lowering prices. A marketplace gains from that gap. The people selling in it compete harder for each night, and Key Data's chief executive said more supply, with the cost of living, had likely hurt revenues that summer. Index funds tracking the S&P 500 stood to get little say either: Class B holders had 91.6% of the votes at the end of 2022. A host's lesson: read the platform's quarterly numbers as a competitor would, and price for the listings it is adding.

The other side

Airbnb's best case is that a bigger market does not have to be a harder one. Nights booked still grew 11%, and gross booking value, the pool that host earnings come from, rose 13% to $19.1 billion. Lower prices were a choice hosts made, and lower prices bring guests. Key Data's figures cover the whole US market, its chief executive tied the summer partly to the cost of living, and he expected the US to improve in 2024. A platform that earns $650 million in a quarter is also a steadier partner than the one that lost $352.0 million in 2021. For index investors, S&P published its tests and chose Airbnb under them.

What it meant for hosts

When the change was due, on 18 September 2023, a host had nothing to do. What the index notice gave a host was a reason to read the company's public numbers the way its shareholders did.

Competition was rising by Airbnb's own count: 19% more active listings than a year earlier, against 11% more nights and experiences booked.
Pricing was under pressure. Airbnb reported more hosts using its discounting tools and lowering prices, and Key Data's US summer figures showed the average daily rate down from $328 to $302.
Bookings were arriving later. Key Data's figures for September to December, an early picture taken at the end of August that the report said to treat with caution, showed US booking windows 11.4% shorter, 60 days against 68, and revenue per available rental $20 lower than a year before.
The board changed in the same month. A Form 8-K showed that on 7 September 2023 the board appointed James Manyika as a director and made him chair of its Stakeholder Committee in place of Angela Ahrendts, who was to stay on the committee as a member.

Sources

S&P Dow Jones Indices, Blackstone and Airbnb Set to Join S&P 500; Others to Join S&P 100, S&P MidCap 400 and S&P SmallCap 600 (1 September 2023).
Bloomberg (Internet Archive capture of 7 February 2024; opening paragraphs), Blackstone, Airbnb to Join S&P 500 After Index Rebalancing (1 September 2023).
CNBC, Stocks making the biggest moves premarket: Airbnb, Oracle, American Express and more (5 September 2023).
Schaeffer's Investment Research, Airbnb Stock Pops on S&P 500 Inclusion (5 September 2023).
ETF Stream (Internet Archive capture of 22 September 2023), Blackstone and Airbnb to enter S&P 500 following rebalance (6 September 2023).
Short Term Rentalz, Key Data: US STR market sees 17 per cent revenue drop (13 September 2023).
Airbnb, Inc. (U.S. Securities and Exchange Commission), Form 8-K, date of report September 7, 2023 (11 September 2023).
NYC Mayor's Office of Special Enforcement (Internet Archive capture of 7 September 2023), Registration Law - OSE (7 September 2023).
Airbnb Newsroom, Airbnb Q2 2023 financial results (3 August 2023).
Airbnb, Inc. (U.S. Securities and Exchange Commission), Form 10-Q for the quarterly period ended June 30, 2023 (3 August 2023).
Airbnb, Inc. (U.S. Securities and Exchange Commission), Form 10-K for the fiscal year ended December 31, 2022 (17 February 2023).
S&P Dow Jones Indices, S&P Dow Jones Indices Announces Results of S&P Composite 1500 Index Consultation on Share Class Eligibility Rules (17 April 2023).
S&P Dow Jones Indices, S&P Dow Jones Indices Announces Update to S&P Composite 1500 Market Cap Guidelines (5 July 2023).
S&P Dow Jones Indices (Internet Archive capture of 6 September 2023), S&P U.S. Indices Methodology, July 2023 (July 2023).
Davis Polk, S&P Dow Jones reopens its indices to companies with multiple share classes (20 April 2023).

Airbnb Is Named to the S&P 500 Index