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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

#31

Post by onlyrealcuzzo »

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?

Also, isn't EVERY analyst predicting a recession sometime between now and 2 years from now? In the event of one, vacation rentals are the first thing people cut back on.

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

#33

Post by opportune »

toomuchtodo wrote: post #10
the_watcher wrote: post #8

Earlier quoted context omitted.

I have conflicting thoughts on this. In the US, it's true that in the near term regulations are likely to get more, rather than less onerous at the local and state level. At the federal level, I don't anticipate any changes in either direction until at least 2020, but probably longer, as this is the kind of issue that is generally hyperlocal as opposed to splitting entirely on party lines (the cynical view is that it…

The places where Airbnb has left to grow are more likely to enact legislation restricting their operation. The low hanging fruit is already picked.

Highly disagree, I see Airbnb growing massively in the developing world as local safety+tourism infrastructure, desire to travel there, and internet familiarity/enough English to make a listing among those living there increase in the next 10-20 years. Of course, Airbnb is already big in places like Bali, but over time I see essentially all areas of Indonesia, Malaysia, Ecuador etc. becoming vacation destinations

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

#34

Post by jameslk »

mylons wrote: post #27
jameslk wrote: post #24

Earlier quoted context omitted.

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.

That sounds like hedging a bad idea with another bad idea. Options expire, so not only do you have to be right that the stock will go down, but you also have to be right that it will go down before your options expire. The further away the expiration, the higher you'll be paying for implied volatility. This sounds like a terrible strategy for a hunch that regulations are going to eventually impact Airbnb at some fuzzy point in the future.

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

#35

Post by Traster »

the_watcher wrote: post #12
rayvy wrote: post #2

> "For starters, Airbnb says it was profitable on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis for the second year in a row in 2018." Not sure if this is financial engineering or if they're actually profitable, but I'm so curious to see how Wall St responds to this "profitability", especially since growth plays (e.g., FAANG) just cratered in Q4'18. Not to get too involved in the di…

"profitable on an EBITDA basis" is about as mainstream a finance metric there is outside of the basic GAAP metrics (and many regard EBITDA to be more reliable than GAAP).

I think We Work did a great job of destroying mainstream understanding of EBITDA with their 'community adjusted EBITDA' which took a well defined term and made it part of completely meaningless term.

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

#36

Post by onlyrealcuzzo »

dawhizkid wrote: post #32

Has anyone bought a property to exclusively rent via AirBnB? Looking to buy something with this in mind.

Several of my friends bought places in Palm Springs to do this in 2012-2015. They've made an absolute killing so far. But who knows what will happen if another recession comes.

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

#37

Post by forkLding »

rayvy wrote: post #2

> "For starters, Airbnb says it was profitable on an EBITDA (earnings before interest, taxes, depreciation and amortization) basis for the second year in a row in 2018." Not sure if this is financial engineering or if they're actually profitable, but I'm so curious to see how Wall St responds to this "profitability", especially since growth plays (e.g., FAANG) just cratered in Q4'18. Not to get too involved in the di…

Should be pretty reliable metric, they're not an asset-heavy company (aka they don't own a lot of property etc.) so depreciation isn't likely to be a major part of their expenses anyway.

Most companies are evaluated based on EBITDA as well anyways

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

#38

Post by santiagogo »

dawhizkid wrote: post #32

Has anyone bought a property to exclusively rent via AirBnB? Looking to buy something with this in mind.

My mom has done it with my help. From what I've seen, it's a bit more profitable than renting out directly, but also very time consuming (especially cleaning and housekeeping). If you factor in the time it takes to manage the Airbnb it probably isn't much more profitable than regular renting, unless you manage a large number of Airbnb's or have a large amount of free time and enjoy the whole hosting thing, like my mom who is retired and loves meeting tourists.

I would also add that the city and location probably influence the economics and profitability of it a lot.

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

#39

Post by craftyguy »

epa wrote: post #30
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..

> What's wrong with a $1 profit?

It's hard to react to unforeseen conditions in the market and/or grow the company when you have no war chest. You could borrow more money, then you'd no longer be 'profitable' for at least some amount of time.

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

#40

Post by ThrustVectoring »

dawhizkid wrote: post #32

Has anyone bought a property to exclusively rent via AirBnB? Looking to buy something with this in mind.

I wouldn't buy a separate residence for this - the regulatory environment in general is highly biased against that use case, so it comes with an unacceptably large legal risk IMO.

Instead, I'd suggest buying a primary residence that is a duplex or is larger than you need, and subletting out the extra room(s) or other half of the unit. Your financial commitment is much less (just the difference between purchase prices of larger vs smaller houses), financing via mortgages is much more reasonable, and legal statutes that cover this use case tend to be more favorable to you.

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