It’s SoftBank.
Retail is being blamed. But there aren’t enough retail dollars, nor enough odd-lot trading, to explain these deltas.
Airbnb’s Stunning IPO
241–250 of 273 posts
Re: Airbnb’s Stunning IPO
#242Another strong argument in favor of doing a direct listing to determine market price (and raising privately beforehand if possible). Anytime one party does a transaction repeatedly as their job and one party does a transaction once (maybe twice) in their life, the transaction will be structured to favor the first group (along with a compelling narrative/PR of why this is not the case). Airbnb lost out here. It's easy…
> Another strong argument in favor of doing a direct listing to determine market price (and raising privately beforehand if possible).
Presumably they would have raised privately at a price roughly equal to what they could have raised in an IPO. So why would that be any better?
Re: Airbnb’s Stunning IPO
#243I 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?
I know it doesn't really work this way anymore but the theoretical point of a public offering is raising capital for business operations. This represent billions in working capital that AirBNB missed out on.
Re: Airbnb’s Stunning IPO
#244Earlier quoted context omitted.
Can someone please explain the winners and losers of this $3.9 Billion discrepancy?
Winners: The investors who bought Airbnb shares at $68 whose shares are now worth $140. Losers: Existing Airbnb shareholders who have shares in a company that could have raised $7B in cash but instead raised $3.5B. In theory, the mispricing "cost" Airbnb around 4% of its market cap, so existing common shares are worth 4% less than they should be. But there's a caveat[1]. Companies like Airbnb (no stable profit) are a…
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Re: Airbnb’s Stunning IPO
#245It is a misconception that when a company IPOs and the stock pops, that the delta is money left on the table. The vast majority of the shares are sold to institutional investors. There are explicit or implicit lock-up periods in place. And most of the pre-IPO investors will typically have a 6-month lockup. So if 10% of shares are sold in the IPO and 10% of those shares are actually trade-able, only 1% of the total stock is liquid. That can lead to very large price swings (i.e. the pop).
Re: Airbnb’s Stunning IPO
#246Market 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…
I agree, but I also think the valuations of certain OTAs also look frothy compared with digital distribution platforms with comparable cost bases and scale and arguably better moats. Sabre's market cap is under $4bn.
Re: Airbnb’s Stunning IPO
#247I 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?
Plus of the 10% of the shares soldo, most were to institutions with an understanding that they are going to hold it "long term" (i.e. which may be just a few months). Part of the IPO road show is for the company to select investors that believe in the company and who will be "good" shareholders.
Re: Airbnb’s Stunning IPO
#248and I thought they were struggling because everyone is staying home due to Covid...
Lesson 1: Don't get your financial information from news or social media. From tesla to bitcoin to anything really, it's amazing how wrong the news and social media have been. Just not too long ago, the news and social media was saying tesla was overpriced and going to crash. Instead it's gained 10X or more in value.
I also remember not too long ago Tesla's CEO was saying Tesla was overpriced.
Re: Airbnb’s Stunning IPO
#249Earlier quoted context omitted.
They are struggling. They IPO not due to the health of their business, but because so many dupes are putting their dumb money on the table these days.
I assume most investors are smarter than that and are hoping AirBnB will build a monopoly similar to how google did with search and Wikipedia did with online encyclopedias. A 5% monopoly tax on most rentals/hotels does give you a huge profit eventually.
I just don't see a monopoly being possible in this space for a variety of reasons. Specifically it doesn't seem politically viable.
Re: Airbnb’s Stunning IPO
#250All 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…
This IPO does have a bit of a Cantillon Effect feeling to it now that you mention this.