Is It a Good Idea to Wait for Airbnb to Go Public?

Airbnb is ready to go public this December. The company is expected to get listed on the Nasdaq under the ABNB symbol, led by Goldman Sachs and Morgan Stanley, according to the official prospectus.

According to experts, the IPO could value the business at a whopping $30 billion. But, is it the right time to invest in the company, especially at a time when fewer people are traveling and home-sharing or travel related stocks are suffering?

CEO Brian Chesky seems pretty confident, but investors need to be very careful.

More about the Company

Founded in 2008, the company is expected to go public in December with more than 7.4 million listings and four million hosts. 

In addition to home-sharing, it also offers tours, pottery classes, and other experiences. The business is available in 191 countries with plans to reach even more corners.

A Little About the Financials

As mentioned earlier, the company is expected to be valued at $30 billion, which is slightly lower than the highest high it recorded in 2017 when it was valued at a little above $31 billion.

Still, the current situation is pretty impressive considering the company took a major hit due to the pandemic and fell down nearly 42 percent to $18 billion.

While the business runs 24/7, it typically does well during summers when more people look for vacation rentals. However, 2020 proved to be quite a challenge. For the second quarter, revenue fell nearly 72 percent and its loss almost doubled.

The third quarter saw surprisingly better numbers. Revenue fell about 18 percent and the company made a profit of $219 million, thanks to improved cost cutting.

Chesky took loans, laid off about a quarter of staff, and got rid of unnecessary businesses, causing expenses to drop nearly 22 percent. 

So, Is It a Good Investment?

Airbnb is a reliable name but it has lost money every year since its inception with its cumulative losses standing at $2.8 billion. Still, the company appears confident that it will be able to turn corners and make a profit.

Investors seem interested in the IPO but right now might not be the best time to rush. The pandemic is yet to end and a large number of countries are still in lockdown.

While Chesky has proven his mettle and will likely be able to navigate through these challenges with aplomb, there’s no reason to be the first to buy these shares. 

We think the fear of missing out will cause the price to drive up but major losses and lower revenues in the last quarter of the year may push the price down, providing a good buying opportunity.

Note: This is not investment advice

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