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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

#51

Post by jameslk »

hervature wrote: post #45
jameslk wrote: post #34

Earlier quoted context omitted.

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 fuzz…

I am pretty sure what the parent is saying is to buy puts in lieu of shorting. There is no hedging here, just limiting downside.

Yes I'm aware, since they suggested puts instead of calls. I'm not sure what your point is since my argument applies in either case. It's much less probable to be right about both price and timing. You won't have unlimited losses, but you will likely be wrong and lose money, unless you're the one writing the regulations.

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

#52

Post by bobbygoodlatte »

gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

Interesting point. I also think the non-fungibility of Airbnb's listings will help them maintain their margins. For many Uber customers, a ride is a ride is a ride.

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

#53

Post by calgaryeng »

aboutruby wrote: post #47

Valued at $31 billion in 2017, raised $4.4 billions. Probably at least worth between 50 and 100 billions now, I would say $80-$120 billions. YC will be funded for a couple centuries with that IPO.

Just an FYI from a native english speaker - sums of money do not use the plural version of the value unit.

i.e. should be "raised $4.4 billion" not "raised $4.4 billions"

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

#54

Post by hrez »

jameslk wrote: post #34
mylons wrote: post #27

Earlier quoted context omitted.

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 fuzz…

I couldn't help but notice that by that logic auto insurance is a bad idea. Not only you have to be right that you get into an accident. But also you have to get into that accident before contract expires.

Would he pay premium for the options? - Sure. But that buys something. Limiting the loss vs shorting for example. Besides shorting isn't exactly free either.

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

#55

Post by ben_jones »

notahacker wrote: post #26
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 difference to me as a consumer is that Booking has commoditized its customer support to an infuriatingly low quality. Admittedly I don't use Air BnB often but I will go miles out of the way (literally and figuratively) to avoid dealing with their systems requiring "travel insurance" for what used to be simple customer service requests.

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

#56

Post by bboreham »

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…

“Earnings Before Bad Stuff”

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

#57

Post by conanbatt »

gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

What im not sure about is Airbnb's moat. They have a great brand name and all, but their service is very limited: 15% is a very large cut to take on these transactions. What prevents another company from doing the same at 12% and costing 50% to operate?

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

#58

Post by conanbatt »

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.

If regulations went up, Id bet more on airbnb: they will hurt competition a lot more than it will hurt them. They will drive regulations.

Do you see Google, Facebook etc being hurt by the regulations put in place in the last 10 years?

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

#59

Post by the_watcher »

Traster wrote: post #35
the_watcher wrote: post #12

Earlier quoted context omitted.

"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.

Yes, "Community-adjusted EBITDA" is a nonsense metric. That said, it is not EBITDA, and given that WeWork is still private, I don't see any reason to believe the average person has had their conception of EBITDA irreparably damaged by it (or even impacted at all).

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

#60

Post by heurist »

conanbatt wrote: post #57
gringoDan wrote: post #43

They're often considered similar businesses, but intuitively it seems to me that, long-term, Airbnb will be valued higher than Uber and other ridesharing companies. Home rentals seem to be simpler market to operate in than coordinating real-time supply and demand between drivers & riders. Additionally, Uber seems to be facing issues on the driver side of the business - they have a $650 driver acquisition cost & a 12%…

What im not sure about is Airbnb's moat. They have a great brand name and all, but their service is very limited: 15% is a very large cut to take on these transactions. What prevents another company from doing the same at 12% and costing 50% to operate?

Their social network and brand recognition is their moat for now. Hosts and guests trust Airbnb. An upstart will have overcome a lot of momentum to take on Airbnb in the broad market.
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