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Airbnb’s Stunning IPO

nytimes.com

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Re: Airbnb’s Stunning IPO

#231

Post by zone411 »

grailed wrote: post #8

I hear a lot of talk surrounding their "moat" and many skeptics are questioning whether or not they will be able to maintain their competitive advantage. However, it feels like Airbnb has solved a truly hard problem: how to make people trust your service. People are using this app to go stay in random people's homes. How often do you hear people talk about being murdered in uber? I still hear it. How often do you hea…

My friend had her whole house ruined with everything stolen (and then only received a fraction of the cost back because of bad record keeping). I don't think she'll be recommending hosting to anyone.

Re: Airbnb’s Stunning IPO

#232

Post by xiaosun »

11thEarlOfMar wrote: post #154

I recall that Facebook's first day closed at or near the offer price: Opened at $38 and closed at $38.23. That's a masterful IPO pricing accomplishment, meaning, FB left $0.23 per share on the table. Moreover, the stock traded below the open for 5 quarters before starting it's impressive rise. Even with that pause, buying at the open and holding till now would have yielded nearly 27% annualized return. It's just my o…

About ~10% of AirBnbs shares were offered in the IPO. So only the shares sold in the IPO "left anything on the table". The other 90% of shareholders still have the option of selling at the higher market price.

Who's the say this wasn't the intended effect - the benefit to the valuation of the 90% of shares still being held is greater than the opportunity cost of the 10% shares sold in the initial IPO?

Re: Airbnb’s Stunning IPO

#233

Post by prewett »

BoiledCabbage wrote: post #61
grailed wrote: post #8

I hear a lot of talk surrounding their "moat" and many skeptics are questioning whether or not they will be able to maintain their competitive advantage. However, it feels like Airbnb has solved a truly hard problem: how to make people trust your service. People are using this app to go stay in random people's homes. How often do you hear people talk about being murdered in uber? I still hear it. How often do you hea…

> I hear a lot of talk surrounding their "moat" and many skeptics are questioning whether or not they will be able to maintain their competitive advantage. Why do they need a moat? What happened to all the free market capitalism everyone believes in? Let the better company win out in true competition? Or is that just a taking point, and everyone actually believes in building moats to avoid competition?

A moat is what enables you to avoid being in a race-to-the-bottom commodity business. In a commodity business you get just enough returns to cover cost of capital plus a little bit. With a moat you can get 20% - 30% profit margins: Coca-Cola, Apple, Google. A moat is also what builds an enduring business. The moat is what prevents other people from just doing that same thing you are doing but at a lower price. A moat isn't rent seeking, it is (or at least can be) out-competing. The iPhone was a huge moat for Apple for many years; they were 2 years ahead of everyone when it came out, so much so that engineers at Microsoft and RIM both thought that the announced product was impossible. The M1 is similar, everyone is probably two years behind, if they can even catch up. (Eventually they will, because Apple probably can't ride the process improvements that long)

Re: Airbnb’s Stunning IPO

#234

Post by brown9-2 »

xiaosun wrote: post #232
11thEarlOfMar wrote: post #154

I recall that Facebook's first day closed at or near the offer price: Opened at $38 and closed at $38.23. That's a masterful IPO pricing accomplishment, meaning, FB left $0.23 per share on the table. Moreover, the stock traded below the open for 5 quarters before starting it's impressive rise. Even with that pause, buying at the open and holding till now would have yielded nearly 27% annualized return. It's just my o…

About ~10% of AirBnbs shares were offered in the IPO. So only the shares sold in the IPO "left anything on the table". The other 90% of shareholders still have the option of selling at the higher market price. Who's the say this wasn't the intended effect - the benefit to the valuation of the 90% of shares still being held is greater than the opportunity cost of the 10% shares sold in the initial IPO?

that 90% would have had the same opportunity if the opening was higher

Re: Airbnb’s Stunning IPO

#235

Post by actuator »

triceratops wrote: post #219
actuator wrote: post #217

Earlier quoted context omitted.

Only the ones who join now. I am sure the pre IPO employees are more than happy.

Pretty sure they've been paying pre-IPO employees in RSUs for a while by now. Most late-stage companies stop paying options at a certain point. And even the pre-IPO employees will need to be paid RSUs in the future to retain them.

Aren't RSUs granted like regular stocks are?

Say, I join a public company. If they say they will pay me 500k USD worth of stocks, it generally means that I get 500k/(average share price of month, share price on stock offer date etc.) stocks subject to vesting cycle. Basically, I have fixed number of shares from that point and they appreciate or depreciate with the market.

I am assuming if AirBnB offered 500k USD of RSUs similarly and the RSU price was say 50. That means the person had 10k RSUs subject to vesting cycle. So, if the stock price is 120 now they have 1200k USD worth of stocks subject to vesting cycle.

Re: Airbnb’s Stunning IPO

#236

Post by reissbaker »

jpalmer wrote: post #31

Market cap now exceeds top 5 US hotel chains combined. How much can it grow from here?

Booking.com, a major online hotel aggregator and probably more akin to Airbnb than a physical hotel chain, has a market cap of $85B — not far off from Airbnb's $100B.

I don't think individual hotel chains are an equivalent business to Airbnb, since those have high real estate costs and have clear physical hurdles to growth: you have to buy property and build hotels, and staff all of them to run the front desk, carry people's luggage, clean the rooms, do laundry, etc. The comparison to other OTAs like Booking — that don't own the properties but make money from listing them and allowing booking — makes more sense IMO. The valuation looks a lot less frothy with those comparisons.

(I am an ex-Airbnb employee and still hold many shares FWIW.)

Re: Airbnb’s Stunning IPO

#237

Post by michaelyoshika »

All my experiences using Airbnb have been terrible and their apps/website are the slowest I've ever seen in a tech company.

But I think the price is reasonable because the Fed printing machine won't stop and US has long lost the opportunity to ever increase interest rate so everything will just pop up like end of world, e.g. what has Apple done this year so they are now worth 1 trillion more than last year? Thus 60b for Airbnb is basically the same as 30b last year.

tl;dr: if your asset doesn't pop 100% this year, you are a fool.

Re: Airbnb’s Stunning IPO

#238

Post by djtriptych »

I bought at $146 and feel ok at that price for a long play.

I see regulation as the major risk.

But getting millions of people to trust you with their homes is one hell of a moat.

Everything about the post-pandemic world favors AirBNB. - Remote/Mobile workers. That alone is gonna make them an incredible amount of money. This isn't ever going to change. - Pandemic housing boom. People are buying at unprecedented rates. This is money leaving cities. This is a generation of global-minded, young internet-savvy buyers. AirBNB wins here. - Economic recession / unemployment. Everyone who _does_ own a home and finds themselves in financial trouble is going to consider renting a room. It's an obvious move and I think the job market will have at-risk homeowners considering this move en masse.

Re: Airbnb’s Stunning IPO

#239

Post by triceratops »

actuator wrote: post #235
triceratops wrote: post #219

Earlier quoted context omitted.

Pretty sure they've been paying pre-IPO employees in RSUs for a while by now. Most late-stage companies stop paying options at a certain point. And even the pre-IPO employees will need to be paid RSUs in the future to retain them.

Aren't RSUs granted like regular stocks are? Say, I join a public company. If they say they will pay me 500k USD worth of stocks, it generally means that I get 500k/(average share price of month, share price on stock offer date etc.) stocks subject to vesting cycle. Basically, I have fixed number of shares from that point and they appreciate or depreciate with the market. I am assuming if AirBnB offered 500k USD of R…

That's my understanding too. But if the RSU was granted at $50 and the price drops to $30, the employee is going to be quite upset (this could've happened to me at a different company if I had taken a certain offer). That's why I said that the share price continues to matter to the company, even post-IPO.

Re: Airbnb’s Stunning IPO

#240

Post by subsubzero »

11thEarlOfMar wrote: post #154

I recall that Facebook's first day closed at or near the offer price: Opened at $38 and closed at $38.23. That's a masterful IPO pricing accomplishment, meaning, FB left $0.23 per share on the table. Moreover, the stock traded below the open for 5 quarters before starting it's impressive rise. Even with that pause, buying at the open and holding till now would have yielded nearly 27% annualized return. It's just my o…

Its funny you should mention that case(fb). It was very well priced if you were facebook as you lost barely any money. I remember the headlines during 2012 were the exact opposite, it was priced way too high and there was no 1st day "pop", everyone in the media/financial group declared the IPO a flop, the stock dropped after and settled near $12 a share a few months later, from there is started its huge rise to 200+.
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