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Ahead of IPO, Airbnb achieves profitability for second year in a row

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Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#21

Post by _delirium »

jedberg wrote: post #7
ianhawes wrote: post #6

Earlier quoted context omitted.

I will sell you the puts myself. You're ignoring a massive market for vacation rentals outside of major metropolitan areas that AirBnB has conquered from craigslist. The risk for regulation has passed as citizens see AirBnB as an accepted reality. Hotels aren't happy, but rightfully see AirBnB as a competitor.

> The risk for regulation has passed as citizens see AirBnB as an accepted reality. Hotels aren't happy, but rightfully see AirBnB as a competitor. I agree with your overall, but I'm not so sure I agree with this part. South Lake Tahoe just passed a voter initiative in November that bans AirBnB (and VRBO) except for a few places right next to the major hotels. It was, not surprisingly, heavily supported by the major…

Washington DC also passed a partial ban a few months ago: https://dc.curbed.com/2018/11/15/18095658/dc-airbnb-regulati...

Under the new rules, you can only rent out your primary residence that you actually live in (not second homes/condos), and you can only do that for up to 90 days a year. That'll remove a pretty large percentage of the AirBnB inventory if it's enforced, since a lot of units on AirBnB are investment properties used purely to rent out, not anyone's primary residence.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#22

Post by nostrademons »

ohazi wrote: post #9
ianhawes wrote: post #6

Earlier quoted context omitted.

I will sell you the puts myself. You're ignoring a massive market for vacation rentals outside of major metropolitan areas that AirBnB has conquered from craigslist. The risk for regulation has passed as citizens see AirBnB as an accepted reality. Hotels aren't happy, but rightfully see AirBnB as a competitor.

> vacation rentals outside of major metropolitan areas that AirBnB has conquered from craigslist. Last time I looked, many/most vacation rentals are multiply listed on VRBO, etc. Is there a reason to think that AirBnB is stickier than the other vacation rental sites?

That hasn't been my experience. The other way around has - most VRBO listings are cross-listed on AirBnB, but AirBnB has a large superset of VRBO listings. As a guest, that makes me want to go to AirBnB over VRBO, because I know they'll always have selection, while if I go to VRBO I see largely the same listings I would've on AirBnB.

My experience is that as long as you go to a tourist destination (like Hawaii, Croatia or Santa Cruz) VRBO is fine, but as soon as you start to go off the beaten track (like Northern Northern California past Redding, or suburban rentals near major cities, or rural college towns) AirBnB has much more selection. I just did a quick test at my alma mater (Amherst MA) and VRBO had 4 listings, AirBnb had 15.

When your reputation score stays with the platform and is a major factor in who will host you, it behooves you to pick one platform for all your travel and stick with it, so getting the "long tail" of non-resort travel is a big coup for AirBnB.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#23

Post by cobookman »

adventured wrote: post #16

It's going to be interesting to watch Airbnb IPO at just below the valuation of Priceline.com / Booking Holdings, while Priceline has 3x the revenue and 50-100x the profit. That's a helluva bet on Airbnb still having immense growth left in the tank, as the IPO valuation is already pulling at least five or six years of growth forward.

Agreed. However many tech companies are over valued right now.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#24

Post by jameslk »

justadooda wrote: post #3

I plan on shorting Airbnb once it IPOs. It will only go down in the short term. Regulations were at an all time low and will slowly ramp up. For better or for worse, these regulations will hurt Airbnb. I'd be curious to hear from anyone who seriously thinks Airbnb will be able to achieve substantial growth in the next 5 years, given the increasing likelihood of a slowdown and more regulations from large cities.

1. There's usually a limited number of shares to short an IPO

2. Given the extreme volatility of IPOs and small amount of past history on a company's fundamentals, this will essentially be gambling with the potential of unlimited downside

Good luck!

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#26

Post by notahacker »

adventured wrote: post #16

It's going to be interesting to watch Airbnb IPO at just below the valuation of Priceline.com / Booking Holdings, while Priceline has 3x the revenue and 50-100x the profit. That's a helluva bet on Airbnb still having immense growth left in the tank, as the IPO valuation is already pulling at least five or six years of growth forward.

I also have a sneaking suspicion that whilst AirBnB have undeniably executed well, Booking.com is at least as well placed to go after AirBnB's market as the reverse (AirBnB-type rooms, apartments and villas at competitive prices do exist on Booking.com albeit in much smaller numbers, they also have a strong brand and hosts aren't tied to a single platform).

The other interesting comparison point is Sabre: completely the opposite end of the distribution scale and not a rapid growth company, but they're significantly more profitable than AirBnB at a tiny fraction of the valuation (and have an excellent moat)

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#27

Post by mylons »

jameslk wrote: post #24
justadooda wrote: post #3

I plan on shorting Airbnb once it IPOs. It will only go down in the short term. Regulations were at an all time low and will slowly ramp up. For better or for worse, these regulations will hurt Airbnb. I'd be curious to hear from anyone who seriously thinks Airbnb will be able to achieve substantial growth in the next 5 years, given the increasing likelihood of a slowdown and more regulations from large cities.

1. There's usually a limited number of shares to short an IPO 2. Given the extreme volatility of IPOs and small amount of past history on a company's fundamentals, this will essentially be gambling with the potential of unlimited downside Good luck!

you can buy puts and easily limit your down side.

edit: whoever downvoted this, do you not understand how buying puts works? your risk is capped at the money you spent on the contracts. you can only lose that amount.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#28

Post by refurb »

Profitable by EBITDA could be profit of $1.

Current valuation? Who knows, but I see ~$30B being mentioned in a few media reports.

Assuming that AirBnB eventually becomes an enormous, stable, established company with a P/E ratio of ~15, that would mean ~$2B in profit per year.

Will be interesting to see if they achieve that!

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#29

Post by aphextron »

ohazi wrote: post #9
ianhawes wrote: post #6

Earlier quoted context omitted.

I will sell you the puts myself. You're ignoring a massive market for vacation rentals outside of major metropolitan areas that AirBnB has conquered from craigslist. The risk for regulation has passed as citizens see AirBnB as an accepted reality. Hotels aren't happy, but rightfully see AirBnB as a competitor.

> vacation rentals outside of major metropolitan areas that AirBnB has conquered from craigslist. Last time I looked, many/most vacation rentals are multiply listed on VRBO, etc. Is there a reason to think that AirBnB is stickier than the other vacation rental sites?

>You're ignoring a massive market for vacation rentals outside of major metropolitan areas that AirBnB has conquered from craigslist.

But it’s still at the end of the day just a real estate play. If AirBnB wants to make another dollar, they have to list another property. They can’t just jack the prices like Netflix because they have serious competition on every front. There’s no services they are launching which will provide the kind of returns that technology investors are looking for. It’s linear growth at best.

Re: Ahead of IPO, Airbnb achieves profitability for second year in a row

#30

Post by epa »

refurb wrote: post #28

Profitable by EBITDA could be profit of $1. Current valuation? Who knows, but I see ~$30B being mentioned in a few media reports. Assuming that AirBnB eventually becomes an enormous, stable, established company with a P/E ratio of ~15, that would mean ~$2B in profit per year. Will be interesting to see if they achieve that!

What's wrong with a $1 profit? Sounds like sustainable tax planning to me..
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