Airbnb — 30% Yield Potential for the Most Anticipated IPO 2020
Airbnb, the world-famous online platform for finding and renting private housing around the world, is launching its IPO on December 9. Since its inception, the platform has catered to over 825M customers.
Airbnb IPO: Key Facts
Potential Market
The company estimates its potential market at $3.4T, of which $1.80T accounts for short-term stay or rent.
The core competition includes Booking Holdings (Booking.com, KAYAK, Priceline.com, and Agoda.com), Expedia Group (Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity), Trip.com Group (Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner), Meituan Dianping, Fliggy (Alibaba) Despegar, MakeMyTrip, Marriott, Hilton, Accor, Wyndham, and InterContinental, among others.
Financial Figures
In 2018, Airbnb's earnings increased by 43%, in 2019, 32%, while over the nine months of 2020, the earnings went down by 32% due to the pandemic.
The EBIT margin reached -3% in 2017, 1% in 2018, -10% in 2019, and -19% over the nine months of 2020.
The main reason for the rising spending and lower margin is the development cost growth: 16% of earnings in 2018 compared to 20% in 2019 and 27% over the nine months of 2020; the G&A reached 13% in 2018, 15% in 2019, and 17% in January to September 2020.
Forecast
The upside potential may reach 30% of the starting price ($50).
The FCFF model projects a net worth estimate of $39.064B, taking into account the conservative values. The target price is at $65 per share, with a 30% yield potential.
Airbnb IPO: Key Facts
- IPO Date: December 9
- IPO Cap: USD 28B
- Number of Post-IPO Shares: 596.39M
- Shares for IPO: 51.90M
- IPO Size: USD 2.44B
- Starting Price: USD 44 to USD 50 per share
- Target Price: USD 65 per share
- Underwriters: Morgan Stanley and Goldman Sachs
Potential Market
The company estimates its potential market at $3.4T, of which $1.80T accounts for short-term stay or rent.
The core competition includes Booking Holdings (Booking.com, KAYAK, Priceline.com, and Agoda.com), Expedia Group (Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity), Trip.com Group (Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner), Meituan Dianping, Fliggy (Alibaba) Despegar, MakeMyTrip, Marriott, Hilton, Accor, Wyndham, and InterContinental, among others.
Financial Figures
In 2018, Airbnb's earnings increased by 43%, in 2019, 32%, while over the nine months of 2020, the earnings went down by 32% due to the pandemic.
The EBIT margin reached -3% in 2017, 1% in 2018, -10% in 2019, and -19% over the nine months of 2020.
The main reason for the rising spending and lower margin is the development cost growth: 16% of earnings in 2018 compared to 20% in 2019 and 27% over the nine months of 2020; the G&A reached 13% in 2018, 15% in 2019, and 17% in January to September 2020.
Forecast
The upside potential may reach 30% of the starting price ($50).
The FCFF model projects a net worth estimate of $39.064B, taking into account the conservative values. The target price is at $65 per share, with a 30% yield potential.