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Airbnb’s Stunning IPO

nytimes.com

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Re: Airbnb’s Stunning IPO

#121

Post by tempsy »

raldi wrote: post #108
tempsy wrote: post #18

Earlier quoted context omitted.

that isn’t how an IPO works. just because your stock pops doesn’t mean you handed over money to “wall street” if you’ve raised the money you sought at the set IPO price. the investors who bought the IPO allocation got an immediate 100% return but that is not at the expense of the company.

If you're having a garage sale and I buy a baseball card for the $1 you wanted, and then turn around and sell it for $500, would you feel any regret?

No. Airbnb can sell more shares tomorrow at $150 if they wanted to. OTOH if they gambled and set their price at $150 and the stock tanked it would screw over shareholders who are taxed based on the IPO price and would be underwater immediately.

The IPO is just one transaction in one point in time. They aren’t losing sleep over this.

Re: Airbnb’s Stunning IPO

#122

Post by boringg »

tempsy wrote: post #103
BoiledCabbage wrote: post #62

Earlier quoted context omitted.

> you don’t raise double the money because you set the price 2x unless that was your plan. you would sell half the shares You keep throwing out assumptions without anything backing them. They at a price and amount for sale. Absent an auction set price it's almost certain that price is inefficiently set. And you're arguing that it was efficiently set when we have tens of billions of proof it wasn't efficiently set via…

I said nothing about efficiency. All I am arguing is that Airbnb didn’t screw themselves. No money was taken from them. They raised the money they wanted to raise at a price they thought would be tolerable by the public markets.

And handed all the gains on the first day over to the private allotment that was distributed from Wall Street banks to their top clients because no one else could buy shares. It’s total Wall Street bs.

Re: Airbnb’s Stunning IPO

#123

Post by giarc »

lawlorino wrote: post #88
boberoni wrote: post #65

Earlier quoted context omitted.

Based on Airbnb's other product of "experiences", I could see them growing into the broader vacation industry. I remember a talk by Brian Chesky where he lamented the (pre-COVID) style of travel where tourists just herd into queues at mainstream tourist attractions. Airbnb experiences are supposed to subvert this and create an industry of tourism that is more serendipitous and less standardized.

Yes this seems reasonable. I used to work for one of the main competitors of Airbnb and this was our strategy for growth outside of our core business of selling hotel "roomnights" until Covid hit. The margins on flights and attraction tickets are tiny as you might expect, but the idea was this would lead to more growth in our core business since it could all be tied together in one platform. There's also the less wel…

Brian has talked about getting into flights in some capacity. I wonder if dealing with bookings is not their goal but imagine if they had Airbnb louges in major airports. Those traveling with an Airbnb stay booked could access the lounge free of charge. Sort of like a loss leader to promote downstream Airbnb bookings.

Re: Airbnb’s Stunning IPO

#125

Post by boringg »

tempsy wrote: post #103
BoiledCabbage wrote: post #62

Earlier quoted context omitted.

> you don’t raise double the money because you set the price 2x unless that was your plan. you would sell half the shares You keep throwing out assumptions without anything backing them. They at a price and amount for sale. Absent an auction set price it's almost certain that price is inefficiently set. And you're arguing that it was efficiently set when we have tens of billions of proof it wasn't efficiently set via…

I said nothing about efficiency. All I am arguing is that Airbnb didn’t screw themselves. No money was taken from them. They raised the money they wanted to raise at a price they thought would be tolerable by the public markets.

Bill Gurney talking about the inefficiency of the ipo process on Wall Street and the inherent conflict of broker-client problem the banks carry with them.

https://www.stitcher.com/show/invest-like-the-best/episode/b...

Re: Airbnb’s Stunning IPO

#126

Post by dasudasu »

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…

You do still hear about hidden cameras however.

https://www.theatlantic.com/technology/archive/2019/03/what-...

Re: Airbnb’s Stunning IPO

#127

Post by tempsy »

fullshark wrote: post #116
tempsy wrote: post #93

Earlier quoted context omitted.

No one really knows what is tolerated by public markets right now. Tech stocks are in a speculative bubble caused by zero rates and a flood of money from the Fed. It isn’t as if Airbnb can’t sell more shares at $150 now in a secondary offering if they wanted to. The IPO is just one point in time.

Sure, and Airbnb bet incorrectly, leaving money on the table.

They can raise more more at $150 in a secondary if they wanted to.

The consequence of setting too high and cratering your stock the first day is that employees are taxed based on IPO price. Imagine if you owed taxes at $150 and six months later it was at $70. That would be a nightmare.

And I think you’ve been reading too much Bill Gurley.

Re: Airbnb’s Stunning IPO

#128

Post by raldi »

tempsy wrote: post #121
raldi wrote: post #108

Earlier quoted context omitted.

If you're having a garage sale and I buy a baseball card for the $1 you wanted, and then turn around and sell it for $500, would you feel any regret?

No. Airbnb can sell more shares tomorrow at $150 if they wanted to. OTOH if they gambled and set their price at $150 and the stock tanked it would screw over shareholders who are taxed based on the IPO price and would be underwater immediately. The IPO is just one transaction in one point in time. They aren’t losing sleep over this.

I guess that's the root of our disagreement; I would give an emphatic Yes to my question above, and I think all our other differences of opinion stem from there.

Re: Airbnb’s Stunning IPO

#129

Post by giarc »

treis wrote: post #118
ricotico060 wrote: post #2

For some reason, I just feel this price is too high for them and that it will fall in the coming 2-3 months. Then again, I think about their business model and there’s a lot to like: the don’t own any real estate and if they really wanted to, they could likely let go most of their staff and have a team of maybe 60 - 100 people run the bussiness as it mostly revolves around simply managing the app and keeping it runni…

>For some reason, I just feel this price is too high for them and that it will fall in the coming 2-3 months. They've got a lot going for them they are: A verb now like Google or Zoom. The dominant player in a global 2 sided market Potential major competitors (i.e. AirBnB by Marriott) are blocked by legal complications They're going to be very profitable for a long time. A 100billion valuation is a tall order as it i…

Becoming a verb can be hit or miss. Take for example Kleenex. If I say to you, "can you grab me a box of Kleenex at the store" you don't instinctively buy Kleenex brand, you buy whatever is on sale/stands out/is your regular brand.

Re: Airbnb’s Stunning IPO

#130

Post by tempsy »

raldi wrote: post #128
tempsy wrote: post #121

Earlier quoted context omitted.

No. Airbnb can sell more shares tomorrow at $150 if they wanted to. OTOH if they gambled and set their price at $150 and the stock tanked it would screw over shareholders who are taxed based on the IPO price and would be underwater immediately. The IPO is just one transaction in one point in time. They aren’t losing sleep over this.

I guess that's the root of our disagreement; I would give an emphatic Yes to my question above, and I think all our other differences of opinion stem from there.

There’s nothing to “regret” when the pop doesn’t impact how much you were able to raise.
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