{"id":6380,"date":"2020-12-08T19:17:46","date_gmt":"2020-12-08T16:17:46","guid":{"rendered":"https:\/\/roboforex.com\/blog\/?p=6380"},"modified":"2023-06-29T17:16:56","modified_gmt":"2023-06-29T14:16:56","slug":"airbnb-ipo-the-symbol-of-sharing-economy-planning-go-public","status":"publish","type":"post","link":"https:\/\/roboforex.com\/blog\/2020\/12\/08\/airbnb-ipo-the-symbol-of-sharing-economy-planning-go-public\/","title":{"rendered":"Airbnb IPO: The Symbol of Sharing Economy Planning Go Public"},"content":{"rendered":"\n

Before the COVID-19 pandemics and all borders getting closed, one of the most popular ways of spending your leisure was traveling abroad. Hence, most tourists had to find somewhere to stay.<\/p>\n\n\n\n

\"Airbnb\"<\/figure>\n\n\n\n

In 2007, two students, Joe Gebbia and Brian Chesky created a website AirBedAndBreakfast.com for renting out apartments. A year later, a programmer Nathan Blecharczyk joint in and managed to increase the request traffic for the website. Since 2008, Airbnb, Inc. has been functioning in San Francisco in its current format.<\/p>\n\n\n\n

These 12 years made the company number five in the rating of “unicorns” (nonpublic companies estimated as costing over 1 billion USD) and a number three “unicorn” in the USA. Before the pandemics kicked off, the IPO<\/a> had been planned for this summer. On December 2nd, Airbnb sent an S-1 application in NASDAQ, planning an IPO under the ticker ABNB<\/strong>. The Road Show for investors started on December 1st. To assess the company objectively, let us start with its business model.<\/p>\n\n\n\n

<\/span>The Airbnb’s business and market volumes<\/span><\/h2>\n\n\n\n

The company works in the market of short-term apartment rent and event-making. Any host of a dwelling worldwide can offer a tourist their place to stay. This is much cheaper than staying at a hotel and allows for a deeper dive into the culture and rhythm of the country you are traveling to.<\/p>\n\n\n\n

Initially, the main problem was to persuade hosts to let strangers in their houses. Airbnb eases many pains of hosts: it scores tenants, checks their background (based on the feedback from other hosts), filters away frauds, controls age limits, provides for safe payments, insurance, and sometimes even recompense damages. This is how the company builds up trust and loyalty to its services. Since 2007, the company has contracted with 4 million hosts from 220 countries, who hosted 825 million guests. Currently, you can find over 5.6 million rental ads in the Airbnb app.<\/p>\n\n\n\n

The new field of activity for the company became event-making, organizing internships, excursions, etc. Thus, Airbnb becomes a global marketplace of tourist services. The online format allows clients to form exclusive leisure programs in any country. The service, in this case, is an impression.<\/p>\n\n\n

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\"Airbnb\"<\/a><\/figure><\/div>\n\n\n

The target market for all types of the company’s businesses is estimated at 3.4 trillion USD. Sort-term rent makes up for 52.94% of the sum, long-term rent – 6.18%, and the “impression: market – 40.88%. Thus, for 93.82% of its target market, the company boasts unique advantages and leadership. Thanks to the latter segment, Airbnb accesses a share of a market larger than classic tourism. The current volume of the tourist market is 2.9 trillion USD, which is about 2% of the global GDP<\/a>.<\/p>\n\n\n\n

The main rivals of Airbnb are:<\/p>\n\n\n\n

    \n
  1. Baidu, Google<\/a>, and other search systems;<\/li>\n\n\n\n
  2. Certain networking systems: Wyndham, Marriott, Hilton, etc.;<\/li>\n\n\n\n
  3. Chinese “analogs”: Xiaozhu, Tujia, etc.;<\/li>\n\n\n\n
  4. Online tourist agencies: Fliggy, Booking.com, etc.;<\/li>\n\n\n\n
  5. Tourist search systems and catalogs: Trivago, TripAdvisor, etc.;<\/li>\n\n\n\n
  6. Specialized event-making platforms: Klook, Viator, etc.<\/li>\n<\/ol>\n\n\n\n

    The business of Airbnb suffered tangibly from the pandemics – this is obvious if you look at the number of new applications and registrations. On the diagram below, you can see that the April slump restored in June, but in absolute values, the company has not managed to reach the results of the beginning of the year.<\/p>\n\n\n

    \n
    \"Booking<\/a><\/figure><\/div>\n\n\n

    The company had to give sack to some 15% of employees in May to balance its financial performance. Now let us discuss the latter.<\/p>\n\n\n\n

    <\/span>Airbnb financial performance<\/span><\/h2>\n\n\n\n

    In the last 12 months, the company’s revenue amounted to 3.67billion USD. Airbnb provided data starting from 2017. As long as the business still generates a profit, let us focus on analyzing the revenue.<\/p>\n\n\n\n

    \"Airbnb<\/a><\/figure>\n\n\n\n

    In the last 9 months, the revenue dropped by 31.89% against the same period of 2019, which is a direct consequence of the quarantine measures in spring-2020. Up to this year, the average yearly growth of the revenue amounted to 37.07%, according to the accounts. With the closed borders at the end of this year, the revenue might reach 3.27 billion USD.<\/p>\n\n\n\n

    As we can see, the company does not generate any net profit. The net loss of 9 months of 2020 amounted to 696.87 million USD. The main reason for losses is large expenses on marketing. In 2019, the expenses on it increased by 67%, compared to 2018. This year, the marketing budget<\/a> has been decreased.<\/p>\n\n\n\n

    However, the potential of the market promises bright perspectives. Moreover, an increase in rent prices in the countryside partially compensates for the losses in the tourist sphere. Even in such hard times, the company enjoys demand for its services.<\/p>\n\n\n\n

    <\/span>Advantages and drawbacks of the Airbnb IPO<\/span><\/h2>\n\n\n\n

    <\/span>The strong sides of Airbnb<\/span><\/h3>\n\n\n\n