Airbnb IPO: Date, Price and More for ABNB Stock
The Airbnb IPO is finally here. The company upped its IPO price, and investors are excited to get their hands on the long-awaited Airbnb stock.
But is Airbnb a good investment? Here’s what we know…
Airbnb IPO: The Business
In 2007, friends Brian Chesky and Joe Gebbia came up with the idea for Airbnb. The two rented out their San Francisco apartment to three guests in town for a conference. This gave them the idea that people could rent out their homes to tourists wanting a more local perspective. So, in 2008, the two were joined by Nate Blecharcyzk, a software engineer, to create Airbnb.
Airbnb is an online vacation rental company based in San Francisco, California. The company offers lodging and activities around the world from local hosts. This allows locals to profit from their local tourist economy and give tourists a local perspective. Many travelers look to Airbnb as a cheaper and more personalized way to travel.
According to the Airbnb site, as of September 30, 2020, the company…
- Has 5.6 million listings worldwide
- Operates in 100,000 cities
- Operates in more than 220 countries
- Has more than four million hosts
- Has served more than eight million guests
- Gives an average of $7,900 in earnings per host.
As one of the biggest names in the travel industry, it’s no surprise investors are looking for Airbnb stock. Rumors of an Airbnb IPO have been around since 2019. Now the company is finally on track to go public. But in light of the COVID-19 pandemic, why is Airbnb going public now?
Airbnb Stock: The Market
Travel is one of the world’s biggest industries. It includes companies such as hotels, airlines and cruises. But Airbnb’s business doesn’t only include travel. The company also targets the experience economy.
In Airbnb’s prospectus, the company claims its total addressable market is worth $3.4 trillion. This is made up of $1.8 trillion in short-term stays, $210 billion in long-term stays and $1.4 trillion in experiences. Airbnb also notes its serviceable addressable market is $1.5 trillion. Of this, $1.2 trillion is in short-term stays and $239 billion is in experiences. These estimates are based on 2019 figures.
The Effects of COVID-19
The company planned to start the Airbnb IPO process in March 2020. But the coronavirus pandemic had a large effect on the travel industry. Quarantines and stay-at-home orders hurt these businesses as people stopped traveling.
Starting in February, gross nights and experiences booked started to decrease. By March, Airbnb had negative year-over-year (YOY) change. As a result, Airbnb raised $2 billion in debt in April. And sources reported the company laid off 1,900 of its 7,500 employees in May.
However, it saw a steady increase in business from April to July. Bookings went from 8.7 million to 28.3 million. Airbnb contributes this to an increase in domestic travel and people’s ability to work remotely, which can be done from virtually anywhere. But in August, bookings decreased again as COVID-19 cases started to spike.
During the fourth quarter of 2020, another wave of COVID-19 infections emerged. As a result, countries imposed strict lockdowns, in particular in Europe. Similar to the impact of the initial COVID-19 wave in March 2020, we are seeing a decrease in bookings in the most affected regions. As a result, we expect greater year-over-year decline in Nights and Experiences Booked and GBV in the fourth quarter of 2020 than in the third quarter of 2020 and greater year-over-year increases in cancellations and alterations in the fourth quarter of 2020 than in the third quarter of 2020.
For investors interested in Airbnb stock, this brings up the question of finances. So let’s take a look at the Airbnb financial data.
The Financial Data
One of the most attractive things about Airbnb is its growing revenue. In 2017, the company’s reported revenue was $2.6 billion. That increased in 2018 to $3.65 billion, for a YOY growth of 40.4%. Then, in 2019, revenue was $4.8 billion. This was growth of 31.5%. But, as expected, revenue declined in 2020 due to the effects of COVID-19.
One of investors’ biggest concerns about Airbnb is that despite its increasing revenue, the company hadn’t turned a profit. In 2017, Airbnb had a net loss of $70 million. The company managed to decrease its loss to $16.9 million in 2018. But in 2019, net loss increased greatly, to $674.3 million. That’s a YOY negative growth of 3,890%.
And it doesn’t look much better for 2020. For the nine months ended September 30, 2020, Airbnb reported a net loss of $696.9 million. This is an increase from the same time period in 2019, when the company reported a net loss of $322.8 million.
But there is hope for profitability. Despite the reported net loss for the nine months as a whole, Airbnb reported a profit of $219.3 million in the third quarter of 2020. Although Airbnb likely won’t see profit in the fourth quarter, it shows the company can be profitable given the right conditions. This means now could be the perfect time for Airbnb stock.
Airbnb IPO Details: Date, Price and Ticker Symbol
Airbnb filed on November 16, 2020 and set terms on December 1, 2020. The Airbnb IPO date is December 10, 2020. The offering consisted of almost 52 million shares, not including the additional 5,000 underwriter option.
On December 10, Airbnb priced at $68 a share. This puts Airbnb’s valuation close to $47 billion. Airbnb stock trades on the Nasdaq under the ticker symbol ABNB.
But should you invest in Airbnb stock? According to Investment’s U‘s Technical Options Expert Bryan Bottarelli, the answer is yes. See what he has to say about this opportunity in his article, “My Precise Buy Price for Airbnb’s IPO.”
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Investors are excited about the Airbnb IPO. As a household name in the travel industry, Airbnb stock is likely to be successful despite the coronavirus pandemic.