reAlpha Tech (NASDAQ: AIRE) stock was up some 5,000% yesterday in its first day of trading on Nasdaq. That seems to be a rather excessive introduction to the market. And it’s worth pointing out that it was an introduction. That is, this is not an IPO, where the company raises money itself. It’s an introduction. Existing shareholders sell some of their stock to marketmakers to provide their liquidity and then the rest of the stock is able to trade. This can lead to very thin markets of course. Also, of course, the price rather fell back. Peaking at apparently $575 the price fell back to wander around the $100 level after hours. So an 80% or so fall after that 5,000% rise. Well, thin markets do tend to produce price volatility after all. All of this from a starting price of $8.
Given this excitement, speculative fervour, it’s worth thinking about what is done at reAlpha: “We were founded on the belief that every person should have access and freedom to pursue wealth creation through real estate. However, there are significant barriers to entry for the average individual and lucrative returns are currently mainly realized by the “big guys”: private equity firms and larger-scale developers. We intend to leverage technology to democratize access to short-term rental investments. To support this goal, we intend to build what we believe would be a new model for property ownership and real estate investment. We believe in simplified wealth creation, access to new markets, diversification, exceptional Guest experiences, and community-building network effects. We intend to provide retail investors the opportunity to participate in short-term rental properties we acquire by offering a minority interest in each portfolio property. We intend to make that opportunity available pursuant to exempt offerings directed at those retail investors (as well as institutional investors), which we plan to call “Syndicate Members.”
We plan to acquire single-family homes, renovate them to optimize after-repair value, if needed, list them on short-term rental sites and manage them for our benefit and for the benefit of Syndicate Members who purchased minority interests in our acquired properties. In addition to managing the property operations, we will also manage the financial performance of the asset. We are integrating the power of multiple proven models across syndication, investment, and property management. As of October 31, 2022, we owned and operated properties in different cities like Dallas in Texas, Kissimmee, Davenport, and Champions Gate in Florida. We are building a pipeline for acquiring additional properties to be listed on Airbnb and Vacasa.”
Super. But not with our money they’re not going to.
reAlpha Tech stock price from Nasdaq
Think through this business model for a little bit. So they’re to be hosts on AirBnb and Vacasa. We’d all tend to think that’s a market that’s possibly topping out. There’s also a significant payment due to the platforms from any rental income. They’re then going to bring in investors to part own the properties themselves, fractional ownership of the housing asset. The magic sprinkling is that they’re to use AI somewhere in this process.
So, effectively, they’re timeshare salesmen of AirBnbs. With the added AI, of course.
We’d place this in the fun but laughable category. Or, as we’ve said, not with our money they’re not going to. Not as stockholders and not as one of the fractional investors either. Of course, opinions will differ, that’s what makes markets.
