How does everyone feel about the upcoming Airbnb IPO and core business? My take is that, at a 38B valuation, Airbnb is expensive and will fumble like the other companies that went public in 2019: 1. Reliance on regulations - Airbnb hasn't experienced this to the degree Uber / Lyft has, but it's definitely coming. Real estate in prime locations being used for Airbnb is causing major QoL issues for locals. Cities like NYC or even Tahoe are beginning to regulate short term rentals. 2. Competition - problem with a "sharing economy" is that competition will force the companies to operate in tiny margins. No loyalty since travellers / hosts will use the service that makes most economical sense. Not to mention Airbnb will highly likely be pushed out of countries like China due to local competition. Large hotels operating on economies of scale will begin to outprice local listings (if it hasn't already happened). 3. Exposure to economy downturn - revenue is highly correlated with tourism industry, which is historically hit the hardest in recessions. 4. Diversification - not sure how Experiences is doing, but it's the only other feature (AFAIK) that's offered by Airbnb. 5. Growth - growth is strong but definitely priced into the valuation #airbnb #ipo #tc #stock
Airbnb has a reasonable business model and will be successful. People who rent out their properties are generally happy and those who stay at these places are happy too (on average). Uber does not have a good business model. They are making it cheaper for riders through crappy practices like Uber share, at the expense of drivers, who barely make minimum wage after costs! This is not a sustainable and good business model.
It's a fine business model, and they are profitable. But does it justify 2.5x the valuation of Expedia? Or as much as Hilton and Hyatts valuations combined?
TSLA has bigger market cap than Ford and GM combined.
1. Yea regulations will always be a challenge I agree, the best we can do is fight it. It's a big world though and we have millions of listings. Most places are not regulating us out. 2. Major hotel chains are already starting to copy us because they are losing business to us. Marriott starting a home sharing arm. Others have done the same. Home sharing competitors like vrbo are doing a fraction of our volume. Also we aren't being pushed out of China, your comment on that is pure speculation based on nothing. 3. Airbnb was started in 2008 in the middle of an economic melt down and thrived. I would argue that we would do well if another crisis happens because that would encourage folks to rent out parts of their home on our platform in order to help pay their bills. Another crash like 2008 would also cause millions to lose their homes. Those people would need somewhere to stay. Airbnb can be the answer. Airbnb is not just about leisure travel. We also have many business customers. 4. Diversification: Experiences, Plus (homes that are hand verified to be similar quality to hotels), luxe (think rent a mansion and build a custom trip with personal chefs and massages etc). We also have a transportation arm and a boutique hotels arm. Furthermore we have made investments in many companies in the last year to diversify our business. We also have tools built for folks who own large buildings or apartment complexes to help them manage many units or properties. The list goes on we have our hands in tons and tons of stuff. I am obviously a bit biased, but I don't see our stock sinking like Uber did. We also have more cash in the bank than we have raised in funding rounds and the business is strong.
Appreciate the perspective. I agree Airbnb is in a much better position than Uber and Lyft, although their IPOs did not set a high bar to beat. Following up on some of your points: 3. I dont have the numbers, but I can't imagine that usecase would come close to the decreased travel spending. 4. Most of those examples are also accommodations and subject to the same market / regulatory risks. A good example of diversification is Uber eats and Ubers credit card
My impression is that Airbnb usually managed to reach some kind of agreement regarding regulations instead of fighting head-on (obviously a better approach)
You’re not wrong in principle, though you’ve got a few details off. 1, 2, and 3 more or less captures it, though regulation is an issue in nearly every city and housing-constrained area. Hotels don’t like the competition, the locals don’t like the constant flow of people, and lower inventory for sale drives up home prices, so local ordinances are enacted to limit short term rentals. Many (most?) multi-unit hosts are operating illegally. 4: is not quite right. There are other features, but none come close to Homes (which includes Plus and Lux imo). 5: Your definition of strong isn’t what mine is. If you ask around, there are a lot of people bullish on the IPO — most of them the younger crowd — and plenty that think the stock price will stay steady or drop as much as Uber/Lyft/Slack/etc. Nobody has a crystal ball.
Don’t take advice from engineers on business models and stock valuations. Wait until the S-1 and the experts can weigh in with real data.
Not to re-trigger anyone on this thread, and I am not an unbiased source (I have friends on the team) but the characterization of Airbnb’s philanthropic efforts above are not accurate. Some points that I got to relay: • It absolutely is host driven and that is its strength. Real people come together to help each other in times of need. It won’t work for everyone, but it does result in life-changing outcomes for thousands of people. • AirBnb shouldn’t take credit for host generosity, but at the same time, the fact that they have stood up an entire 30-40 person team and dedicated millions of dollars to build this program is laudable. (Fact check: The $20million cited above is Open Homes) • The Open Homes program also directly funds the travel for thousands of people in need every year. It is not all free housing. Some of this money comes from AirBnb and some comes from AirBnb hosts who donate to provide housing to people such as cancer patients who can’t afford to travel for treatment. • The Open Homes team is made up of not only technologists, but also outside experts in refugee rights, disaster response, and medical travel. They are not measured or pressured to deliver business goals, the employees join with goal of helping people. • Certainly AirBnb gets good publicity from the Open Homes program, but this is not kool aid. I wish more companies would dedicate their resources and expertise to helping people and bringing communities together.
Such koolaid employee gathering partying company
I’m bearish on Airbnb and their ipo
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i dont get your point on competition because afaik that hasnt happened, and not a single competitor was named
lol, booking.com
I would say Expedia, Bookings inc, even Google hotels are in the same market. For "local" listings theres a few like sonder or homeaway. I agree, nothing like Lyft vs Uber but we shouldnt value it on current market, but on brand stickiness or economic moat