reAlpha Tech (NASDAQ: AIRE) stock jumped well over 100% yesterday. This doesn’t make up for the over 98% fall in AIRE stock since the IPO of course but then that first price movement was obviously silly. What it has done though for us is entirely remove any - for us at least - objective factors as determinants of that stock price. If people are willing to bid something up to those sorts of levels then clearly opinions here simply are not being driven by the basics. Therefore it’s going to be very difficult to value the stock by looking at the basics.
As we’ve said before, we’re not great fans of reAlpha: “reAlpha Tech (NASDAQ: AIRE) stock up 5,000% - Timeshare sales of AirBnbs” Yes, that is unkind but then that is also how we see this business in its fundamentals. Or, as we also put it: “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.”
Now, it’s true that they announce new things: “reAlpha Tech Corp. ("reAlpha") (NASDAQ: AIRE), a real estate technology company focused on developing, utilizing and commercializing real estate-focused artificial intelligence to drive efficiency, sustainability and growth, today announced the commercial launch of GENA, formerly known as BnBGPT, a novel tool that enhances residential property listings in multiple online real estate marketplaces through the integration of personalized generative AI descriptions.” So, err, ChatGPT to write your ads on Zoopla? OK, we can see the value of that and so on but we also can’t see it as being one of those vastly cash generative ideas. Quite apart from anything else the number of AIs out there means it’s hardly an exclusive product.
However, our problem here is that we simply do not believe in that basic model. Fractional ownership of properties to be rented out in AirBnb? Hmm, no.
The other issue is that AIRE stock does seem to be firmly in the grip of the speculators. Making is pretty much impossible to expect the valuation to reach objective value in any reasonable timespan. As we say, not fans.
