Author Topic: AirBnB - likely 2019 IPO  (Read 1750 times)

SlowAppreciation

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Re: AirBnB - likely 2019 IPO
« Reply #10 on: January 18, 2019, 10:35:36 AM »
Does a valuation of ~$30B for Airbnb make sense? Are there any revenue and profit numbers out there for this company? The combined market cap of HLT and MAR is less than $60B and those two are doing pretty well at the moment and control a significant part of the hotel space.

The article linked above regarding their internal "hedge fund" gives some numbers.

Quote
But the financial details indicate that Airbnb is going strong: “An email to the board and other major shareholders last month [Jan 2018] helped instill further confidence in the business. Airbnb’s earnings before interest, taxes, and other expenses came to $93 million, more than double the company’s forecast of $36 million, according to the email reviewed by Bloomberg. Revenue beat expectations by about $120 million.”

If their internal fund is accounting for up to $60M of that, is that sustainable given the option to now pay only half the deposit at the time of booking?

$30B seems like a lot to pay for $100M of EBITDA, probably higher now since the article is almost a year old.

https://venturebeat.com/2018/02/07/airbnb-reportedly-built-an-internal-hedge-fund-that-makes-5-million-per-month/

Can't imagine it costs a lot to run Airbnb though. No real estate, no data centers, small sales org, no hard assets... can just rent computing from AWS or Azure. Don't have to invest in data centers like other tech cos because it's not something they compete on. If FB's gross margins are ~85%, hard to see how Airbnb's aren't either. And operating expenses are just salaries for engineers and designers, and some litigation costs.

Seems like the business would have tons of operating leverage.


scorpioncapital

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Re: AirBnB - likely 2019 IPO
« Reply #11 on: January 18, 2019, 10:49:08 AM »
I am not so excited. I love Airbnb and use it for travel and even medium term and long term rentals..but it is very easy to just get the hosts phone number or book a few days and extend privately the remainder. Not always but I bet there is huge leakage. Still..there is no business as useful as Airbnb. It really is amazing.

bizaro86

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Re: AirBnB - likely 2019 IPO
« Reply #12 on: January 18, 2019, 11:42:11 AM »
I am not so excited. I love Airbnb and use it for travel and even medium term and long term rentals..but it is very easy to just get the hosts phone number or book a few days and extend privately the remainder. Not always but I bet there is huge leakage. Still..there is no business as useful as Airbnb. It really is amazing.

I run rentals on airbnb in a major city catering towards business travel. I've never had anyone try to extend directly. I set up my own site to market independently. I put my prices 33% lower than airbnb prices, even though they only charge low single digit fees.more than 99% of my bookings come through them, even at the higher price point.

Also, a significant percentage of my customers are staying for the first time on airbnb. They are growing very quickly, and their operating leverage is likely very high. I've interacted with them only a few times and paid many thousands in fees.

Other factors: they are adding more tools for professional hosts. Their previous UI was very cludgy for managing multiple properties. Now it is much better, which should allow them to take market share in independent property managers, which is a big market in vacation areas.

I received a survey from them awhile back asking whether I'd be interested in getting an advance on my payments (paid prior to check-in) for a discount. This would essentially be a factoring arrangement.  I said no, as their proposed pricing tiers were very, very high (20%+ effective rates).

However, running a hosting business eats working capital, and doesn't necessarily attract financially sophisticated people. I think there is a very good chance they will be able to deploy a few billion in float at double digit returns on that.

gfp

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Re: AirBnB - likely 2019 IPO
« Reply #13 on: January 18, 2019, 12:04:46 PM »
Agree with a lot of what you are saying bizaro.  Just today we got a review from another first time airBnB user.  Shocking how many young people are still trying it for their first time.

Regarding the AWS service, I'm curious if you experience the same thing I experience.  I find that the databases for Hosts are really slow.  Calendar, for example, seems to take forever to load - in the app and on a browser.  Do you find that to be the case with Host Calendar?

bizaro86

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Re: AirBnB - likely 2019 IPO
« Reply #14 on: January 18, 2019, 12:09:03 PM »
Yes, I find calendar slow to load. That would be something they could improve. On the other hand, there is a 0% change I move away from them over that issue.

Also, I think more regulation of the space is likely to increase their moat as the incumbent. They are on the ground floor in every jurisdiction, so get integrated into the process. To create a competitor you need to launch at least nationwide (and probably world wide). When airbnb started they just launched their website everywhere.  Now a competitor would need to integrate hundreds of municipal regulatory regimes at launch. Decent moat just from that...

I tried to get some shares on a few secondary sites but couldn't find any. I'd definitely pay a $30B value for it, but I bet it comes out higher than that. 

Revenue/bookings are up huge since they announced that $100 MM EBITDA. I think this business is worth more than Booking.com.
« Last Edit: January 18, 2019, 12:14:56 PM by bizaro86 »

SlowAppreciation

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Re: AirBnB - likely 2019 IPO
« Reply #15 on: January 18, 2019, 01:19:49 PM »
I am not so excited. I love Airbnb and use it for travel and even medium term and long term rentals..but it is very easy to just get the hosts phone number or book a few days and extend privately the remainder. Not always but I bet there is huge leakage. Still..there is no business as useful as Airbnb. It really is amazing.

Out of ~500 people I hosted, this happened < 10 times.

SlowAppreciation

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Re: AirBnB - likely 2019 IPO
« Reply #16 on: January 18, 2019, 01:21:43 PM »
I am not so excited. I love Airbnb and use it for travel and even medium term and long term rentals..but it is very easy to just get the hosts phone number or book a few days and extend privately the remainder. Not always but I bet there is huge leakage. Still..there is no business as useful as Airbnb. It really is amazing.

I run rentals on airbnb in a major city catering towards business travel. I've never had anyone try to extend directly. I set up my own site to market independently. I put my prices 33% lower than airbnb prices, even though they only charge low single digit fees.more than 99% of my bookings come through them, even at the higher price point.

Also, a significant percentage of my customers are staying for the first time on airbnb. They are growing very quickly, and their operating leverage is likely very high. I've interacted with them only a few times and paid many thousands in fees.

Other factors: they are adding more tools for professional hosts. Their previous UI was very cludgy for managing multiple properties. Now it is much better, which should allow them to take market share in independent property managers, which is a big market in vacation areas.

I received a survey from them awhile back asking whether I'd be interested in getting an advance on my payments (paid prior to check-in) for a discount. This would essentially be a factoring arrangement.  I said no, as their proposed pricing tiers were very, very high (20%+ effective rates).

However, running a hosting business eats working capital, and doesn't necessarily attract financially sophisticated people. I think there is a very good chance they will be able to deploy a few billion in float at double digit returns on that.

Similar experience when I was a host. If I had to guess, maybe 80% were first time users. But this was back in 2010 - 2015.

bizaro86

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Re: AirBnB - likely 2019 IPO
« Reply #17 on: January 18, 2019, 01:32:34 PM »
I'm probably around 40-50% new users.

Interestingly (from a very small sample size) they seem to be increasing their wallet share on individual customers.

I've had a few people return for the same events multiple years in a  row. I each case the number of feedback (proxy for transactions) those people had between stays had been growing year over year.

So as new user growth slows they will need to take wallet share on existing users to maintain growth rate, which I think they can do even without adding experiences, restaurants, etc.

scorpioncapital

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Re: AirBnB - likely 2019 IPO
« Reply #18 on: January 20, 2019, 07:01:56 AM »
Probably because tourists tend to not come back to the same place , at least immediately. Then it can be awkward to WhatsApp back after a long time. But I'm thinking of a different market, more medium to long term rentals where relationship is formed. Very unlikely I'd use Airbnb for future reference booking in that case... however the place may not be available which is a risk without long term rentals. For competition with Expedia or booking it is quite good although I note the other two are showing full condos too now, and sometimes at the same price.