Airlinen Analysis: What does the Airbnb IPO mean for us all!?

We have all heard the news, and some of us have wondered why it has taken so long for Airbnb to IPO, however, twelve years after its launch, Airbnb has now been listed on the NASDAQ and we all have the opportunity to buy a little piece of it. 😊

The unicorn home sharing platform, which was set to IPO in 2018 at a valuation of $50Billion was predicted to IPO at on the 9th December 2020 at a valuation of between $25Billion - $30Billion. Surpassing all expectations, it reached a post IPO valuation of $100Billion, shooting beyond anyone’s wildest dreams.

So why did it take so long for Airbnb to IPO and why now?

2017 saw Airbnb in its prime with the team working hard to grow their “experience” product on the platform, enabling those on vacation to not only experience living like a local, but also partake in local experiences as part of their holiday package too.

It was at this point that Brian Chesky hired seasoned Chief Financial Officer Lawrence Tosi and gave him the task of making Airbnb IPO ready by Q1 2018. Pressure from investors hoping to trade their stocks on the open market perhaps? Or breathing space for Chesky to get on with building the company and from pressuring investors?

It is believed that Chesky was extremely reluctant to move Airbnb towards an IPO and resisted this from the outset. Investor pressure was mounting, however Chesky did not give in and instead pulled the plug on Tosi’s IPO preparations making everyone aware through publishing a memo describing Airbnb as focused on an “infinite time horizon”.

Tosi and Chesky clashed and their issues resulted in Tosi’s departure from Airbnb in 2018.

Fast forwarded two years and a pandemic later and the IPO has now happened. But how short or long lived will the surge in valuation and stock activity be?

Airbnb and the short-let space is definitely a growing space and investment in stocks has been a sign of belief and confidence in this sector and what it will achieve in a post covid future.

Looking at the stock activity however, we can see a steep drop in stock value post IPO hype and the PR machine doing what it does best.

The above graph shows that the first five days of trade saw a stock value of £163.93 drop to £121.91 as the rush to buy stocks eased up. This seems like a realistic adjustment of the stock value and those that perhaps bought at the higher end of the market have a long-term strategy and are fundamental investors who will buy stock and hold for a number of years and decided to buy at any cost.

Will this stock continue to drop?

In our humble opinion we think not. The introduction of the covid19 vaccine across the US, Europe and globally will hopefully boost the tourism sector and will bring on a wave of travel activity we have not seen to date.

Will this happen in 2021? That is to be seen as it is our opinion that 2021 will be the year of transitioning back to normality, setting us all up to see amazing numbers in 2022!

The Airbnb IPO is a welcomed one. It does a lot for the short-let sector and puts all stakeholders back on the map of confidence and assures potential guests that the industry is strong and going nowhere any time soon. Once Covid dies down, there will be new challenges. Regulations, limitations, surcharge fees and licencing practices throughout our cities, but as always, we will adapt and make it work.

The Airbnb stock value and IPO activity is more than just an IPO. It is a stamp of approval for our sector and recognition that we are here to stay and grow.

Well done to Brian Chesky for his efforts and sleepless nights so far, and well done to all of us for persevering in such uncertain times and in probably what could be the most volatile and uncertain sector to be involved in through a pandemic.

So, in the meantime, lets keep our eye on this stock value as its growth is a sign of growth for our sector.

Keep washing your hands, social distance and perhaps make a toast to yourselves and to our sector this Christmas and new year.

Well done Brian!