Airbnb
Airbnb homepage as per December 2020

Airbnb IPO defies gravity with a rise of +112%

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On its first day of trading on December, 10, the Airbnb stock has increased by +112.81%. Is that reasonable? Is the formation of a tech bubble to be feared?

Before the IPO, the price of one Airbnb stock (ABNB) was expected between $44 to $50. At the end of its first day on the Nasdaq on December, 10th, the price was at $144.71, up 112.8%.

The company founded in 2008 is expecting a turnover of $3,3B in 2020 and $4.4B in 2021. But the company is still losing a lot of money this year with $3.2B losses and expected losses of $498M in 2021.

At the moment I am writing those lines (on December, 17), the Wall Street Journal reports a market cap of $75.11 B for Airbnb.

Airbnb vs. Marriott

To compare, Marriott International (MAR) who is considered the biggest hotel chain in the world has a market cap of $42.28 B. Mariott has 30 brands with 7,484 properties in 131 countries and over 1,400,693 rooms. Airbnb has no room at all but costs 1.7 times Mariott. Another comparison factor: Airbnb has 6,300 vs. Mariott 174,000…

Airbnb is valued as a software company rather than a hospitality company. Therefore the numbers are difficult to compare but still, they look hard to explain. See the following table.v

 

Airbnb vs. Mariott
Airbnb vs. Mariott, all data on December 17, 2020

Who is investing in Airbnb?

It seems as well that the Covid-19 pandemic has not restrain the appetite of some investissors. But are they really investors? Maybe, they are the new comers that join the market with the confinment and that are using it as a new form of casino. 

Maybe this is the sign of a new bubble as the case of Airbnb is not isolated. One could also question the value of the recently introduced C3.ai or the indescent market cap of Tesla to give only 2 exemples. 

Sources

Airbnb Inc. Cl A Stock, The Wall Street Journal

Marriott International Stock, The Wall Street Journal

This post was inspired by a video in French: Les marchés sont devenus fous ?, Xavier Delmas, December 11, 2020

Photo credits

Airbnb homepage and photo from Airbnb media assets, Airbnb, Inc

Wall Street signs photo by lo lo on Unsplash

Photo of a casino by Kay on Unsplash

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