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

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 up: What 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.