Airbnb files to go public - Here's everything you need to know about the IPO of the year - The Average Joe

Airbnb files to go public – Here’s everything you need to know about the IPO of the year

November 17, 2020

The long waited Airbnb IPO is finally here. On Nov. 16, Airbnb released their S-1 document, the treasure chest of information covering a company’s financials and information, before going public.

Airbnb is expected to start trading on the Nasdaq stock exchange in the month of December under the ticker ($ABNB) at a valuation of ~$30b.

The long road to IPO

Airbnb, the home rental platform, which was founded in 2008 popularized the concept of short-term home rentals.

In 2008, designed and sold 1,000 custom cereal boxes — Obama O’s and Cap’n McCains to fund Airbnb’s $25k debt.

In 2011, Airbnb was in 89 countries and was valued at over $1b.

In 2014, several major cities including New York City had threatened to ban Airbnb and short-term rentals.

In 2016 – 2019, the company expanded into luxury rentals, complimentary services (e.g. unique experiences) and even last-minute hotel bookings.

And finally, in 2020, the company will be going public.

(Catch upWhat is an IPO?)

Airbnb at its worst

When COVID first hit, Airbnb had lost over 72% of its revenue in the second quarter of 2020 — the company quickly went into survival mode, borrowing $2b, laying off 25% of its staff and cutting its marketing spend by over 53%.

Can you handle Airbnb at its worst?

  • 8.7m bookings in April 2020, down 72% from April 2019
  • $700m loss in the first 9 months of 2020 vs. $322m loss in first 9 months of 2019
  • $2.5b revenue in the first 9 months of 2020 vs. $3.7b in first 9 months of 2019

The Airbnb today

Airbnb’s sales in its recent quarter (July – Sept.) have recovered significantly — down only 18% from last year. Travelers preferred Airbnb over hotels during the pandemic and local rentals had increased in popularity,

With ~$4.5b in cash at the end of Sept., Airbnb is in a much better position compared to where it was at the beginning of the year. The company even reported a profit of $219.3m in the third quarter of 2020.

For investors… Quantifying the hype around Airbnb

Business professor, Scott Galloway (ProfG), expects Airbnb to be worth over $120m by 2022 — nearly 4 times more than its expected IPO valuation.

  • Brand dominance… Airbnb has more rooms on its platform (7m) than the 5 largest hotel chains in the world (4.3m)
  • Business model… ProfG compares Airbnb’s business model to that of Visa/MasterCard — asset-light, high-margin, global brand with customers around the world

If investors value Airbnb similar to credit card companies — whose stocks are worth over 20x sales — Airbnb could be worth nearly $100-120b if it returns to its pre-COVID 2019 revenue of $4.8b.