Dear Reader
Airbnb, the shared lodging company, is about to list its common stock on public stock exchanges.
What is Airbnb worth? Airbnb recorded revenue of 4.8 bln. USD in 2019, up 32 % on 3.7 bln. USD of revenue in 2018.
I think Airbnb is worth around 18 bln. USD in the current market environment. Even at 18 bln. USD market capitalization Airbnb will trade at higher multiples compared to Expedia, Hilton and other comparable companies. Yes, Airbnb is a technology company which could potentially trade at potentially 20 times Price/Sales or even more, but not in the current coronavirus pandemic.
Even if Airbnb grows revenue at 20% percent in the next 5 years it will find it difficult to justify a valuation of more than 18 bln. USD. Airbnb is a lodging discounter, so reaching high profitability will be difficult. What is more, due to the coronavirus shock, I believe travel and tourism will suffer in the next 5 years and it may take 7 years before the travel and tourism industry reaches its recent peaks again.
According to media reports, Airbnb can reach a market capitalization of 35 billion USD upon its listing. According my estimate, Airbnb is worth around 18 billion USD intrinsically or around half its expected market capitalization when the shares become public soon. In other words, Airbnb is grossly overvalued as things stand.
Even in its IPO Prospectus Airbnb states that it "may not be able to reach profitability".
Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn, Facebook etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed on the blog are Petar Posledovich's. Petar Posledovich does not guarantee the accuracy of the information presented on this blog and social networks. The information presented is "as is".
Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.
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Respectfully yours,
Petar Posledovich
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