Airbnb: Why Now May Be the PERFECT Time for a Travel Company to IPO

Investors appear to be looking past the current headwinds to a bright future for the firm

Uptrend 4

After more than five years of speculation and anticipation, US home rental company Airbnb (ABNB) is finally poised to go public, likely on 10 December, as the final mega-IPO of the year (though the DoorDash IPO will also command investors’ attention ahead of the holidays).

Needless to say, a travel-dependent company going public in the midst of a global pandemic isn’t optimal timing, but investors appear to be looking past the current headwinds to a bright future for the firm. According to Airbnb’s IPO prospectus, the firm saw Q2 revenue fall -72%, forcing the company to lay off 25% of its workforce and take on nearly $2B in high-interest debt; Sales fell “only” -18% to $1.3B in Q3, and the firm was able to post a profit of $219M after cutting costs earlier in the year.

While travel has been upended in ways no one could predict, Airbnb has been able to recover faster than many of its more traditional peers as travelers seek out quieter, more private destinations and longer stays. Coming into 2020, Airbnb was valued at around $35B in the private markets before dropping as low as $18B in April, but based on recent headlines, the firm is targeting a valuation range back in the $30-33B range. In other words, as with the broader markets, Airbnb’s investors are looking past the current rough patch toward a "return to normal" in H2 2021, perhaps with particular pent-up demand for travel.

One factor supporting ABNB’s valuation has been the staggering rally in recent IPOs more generally. Some readers are no doubt familiar with the big moves in Snowflake, Inc (SNOW) and Palantir Technologies (PLTR), but the excitement around IPOs has been broad and widespread over the last eight months. For example, the Renaissance IPO ETF (IPO) - featuring top holdings such as Moderna (MRNA), Uber Technologies (UBER), Zoom Video (ZM), and Pinterest (PINS) – has more than tripled off its mid-March low:

Source: TradingView, GAIN Capital

With broad indices testing all-time highs and traders willing to look past a long winter to a “spring thaw” in economic activity, the ABNB IPO could well follow in the footsteps of other successful IPOs over the last two years when it hits traders’ screens next week.


More from Tech Stocks

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.