Categories IPO, Technology

Airbnb might face an acid test in the run-up to next year’s IPO

The market is abuzz with news of more tech companies going public, indicating that 2020 will be a busy year for the IPO market. Having witnessed a slew of Wall Street debuts this year, there is a mixed sentiment among investors about the upcoming IPOs. The latest firm to announce IPO plans is online accommodation marketplace Airbnb.

Headquartered in San Francisco, California, Airbnb has more than seven million property listings across the world. This week, the company made it official that it is planning to go public next year. It is not known if the management has filed the IPO papers with the regulators. The accommodation integrator may elicit interest among investors for its community-based business model that offers a two-way channel for property owners and guests to connect – the company’s unique selling proposition.

Air of Caution

However, the response to Airbnb’s stock market debut will be a bit cautious, considering the unimpressive post-IPO performance of some of the tech startups that went public recently, including ride-hailing platforms Uber (UBER) and Lyft (LYFT). More recently, the postponement of the WeWork IPO, amid concerns over funding issues and mounting losses, took the sheen off the still-buoyant IPO market. While Uber, Lyft and Slack (WORK) are trading below their IPO prices, others like Pinterest (PINS) and Zoom (ZM) made decent gains since their debut.

Also read: 9 IPO stocks that have given 100+% returns

Considering the travel app’s moderate brand value, it will have to work hard to keep pace with competitors like Booking.com. Like most American e-commerce platforms, Airbnb is making inroads into the Chinese market as part of its expansion plan. The company’s long-term prospects in the Asian country will depend on its ability to effectively comply with the local rules and stay resilient to the macroeconomic uncertainties. It also needs to tackle competition from local accommodation-sharing portals like Xiaozhu.

Mixed Mood

A section of market watchers is bullish about Airbnb’s prospects as a public company, considering its relatively strong financial background that increases the chances of a near-term turnaround. A report from the company recently said it generated about $1 billion in revenue in the second quarter.

Valuation

As per the most recent estimate, Airbnb is valued at $31 billion. Earlier, co-founder Brian Chesky had ruled out going public in the current year. In all likelihood, Airbnb will go for a direct listing.

Related: Booking Holdings Q1 2019 Earnings Call Transcript

The company, which was founded in 2008, has long been doing the groundwork to prepare itself for the public listing – by strengthening the management team and pursuing strategic acquisitions, with the latest being the addition of global online marketplace Urbandoor.

We’re on Flipboard! Follow us to receive the latest stock market, earnings, and financial news at your fingertips

Most Popular

Netflix (NFLX): Four reasons why this leader will not be easy to overthrow

Netflix (NASDAQ: NFLX) has for long been the undisputed king of the streaming space. The streaming industry is seeing massive growth with several new players entering the field. It also

Fastenal (FAST) sees strong post-COVID prospects: Is the stock a buy?

The demand for services that involve minimal human interaction is on the rise as people continue to practice social distancing. Fastenal Co. (NASDAQ: FAST), a market-leading supplier of vending machines,

HEXO Corp. (HEXO) Earnings: 3Q21 Key Numbers

HEXO Corp. (NYSE: HEXO) reported its third-quarter 2021 earnings results today. Net revenue rose 2% year-over-year to CAD22.6 million. Net loss narrowed to CAD20.7 million from a loss of CAD19.5

Tags

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top