Earnings season: Airbnb’s 300% revenue jump

Airbnb is the latest big tech firm to record a Wall Street-beating quarter but see its share price drop.

Airbnb earnings

Airbnb’s headline stats

With revenues totalling $1.34bn in Q2 2021, Airbnb notched up a 300% year-on-year increase. This flew over Wall Street expectations.

Sales were up 175% y-o-y this quarter for a total of $175m. Gross booking value, the key metric Airbnb uses to track host earnings, incorporating taxes and cleaning and service fees, clocked in at $13.4bn. In year-on-year terms, that’s a 320% increase.

83.1 million nights were booked using Airbnb in Q2 2021, measuring 29% growth against the first quarter, and 197% over Q2 2020 when the world entered lockdown. Analysts expected 79.2m nights booked, so again this was another beat.

The key takeaways from Airbnb’s latest earnings report are:

  • Revenues – $1.34bn against $1.26bn estimated
  • Earnings – -$0.11 per share

While a lot of the main measuring metrics were smashing Wall Street estimates, Airbnb shareholders would have lost money, according to these statistics.

That’s fairly odd, given the fact that Airbnb’s net loss has narrowed, falling from $575.6m to $68m. Everything suggests Airbnb is moving in the right direction – but there is still a huge, COVID-19 shaped shadow looming over the rest of the holiday app’s year.

Airbnb stock price

Airbnb shares slid 4% upon publishing its earnings reports. EPS is down too as seen above.

That means it joins other tech stocks like Apple and Tesla posting bumper quarterly results but seeing their share prices dip.

In a letter to investors, the app’s executives stated Airbnb is bracing for Delta variant volatility. Cases continue to rise in the US and around the wider world, meaning travel restrictions and limits on overnight stays could very well make a return.

If that was the case, then stays and revenues may slide in Q3 and Q4.

The company said that although it expects the third quarter to deliver its strongest quarterly revenue on record, it expects Q3 nights and experiences booked to be below that of Q2 and Q3 2019.

“As we exit Q2 and come into Q3, we have a combination of fewer bookings for the fall, just given the nature of some of the seasonality, and any kind of impact potentially on Covid concerns,” Airbnb CFO Dave Stephenson said on a call with analysts.

Vaccination progress and containment of new COVID-19 variants will be key to Airbnb’s sustainability. Summer is also drawing to a close. New bookings in the Autumn and Winter, not the busiest times of the year for holiday-related businesses, have already started to slip as Dave Stephenson points out.

It’s going to be a long six months for Airbnb.

Stocks nudge higher, Fed remains relaxed about inflation

Stocks are higher, recovering some ground lost during a choppy week. Fed officials have been out in force to calm inflation nerves. Governor Christopher Waller said rates will not rise until policymakers see inflation above target for a long time or there is excessively high inflation, saying the Fed will need to see several more months of data. He also stressed that there is only a temporary ‘mismatch’ between surging demand for workers and people’s willingness/ability to get a job. Meanwhile businesses across the US are struggling to find labour: McDonald’s is the latest company to increase pay, raising wages by 10% at its US company-owned restaurants as it seeks to take 10,000 new staff over the next three months. Wage push inflation is of greater concern than short-term supply chain pressures and rising commodity prices. The labour market is far tighter than it looks – the Fed will hope that things change quickly once Federal assistance rolls off later in the year. That could see us endure a rough summer of hot inflation readings, with the Fed looking on and hoping it comes to an end in the autumn.

Another inflation gauge delivered a hot reading. US produce price index inflation rose 6.2% year-on-year, the biggest hike in prices over a 12-month period since the Bureau of Labor Statistics began measurements in 2010. Markets were a good deal calmer despite the figures, with Treasury yields easing of the 1.7% area, the highest in a month. The Dow Jones and S&P 500 both rallied more than 1%, whilst NDX rose over 100pts to make a decent fist of recovering the 100-day SMA, though it fell short and closed off the highs of the day.

European stock markets are broadly higher this morning, taking the positive cue from the US and a strong session in Asia. The FTSE 100 has recovered 7,000 following yesterday’s firm rejection of the area under 6,900. The UK blue chips closed a full 140pts off the lows on Thursday. This morning miners are notably weaker as iron ore prices fell in China, leaving basic materials the only sector in the red, while tech, utilities and consumer cyclicals lead the way higher. BT rallied 3% whilst Sage advanced by the same margin as it reported strong half-year results and said full-year revenues would be at the top end of guidance.

Airbnb shares fell 3% and extended the decline in after-hours trade as the company reported a net loss of $1.95 per share in the first quarter. But revenues were up 5%, beating analyst expectations, and gross booking value was up over 52% year-on-year to more than $10.3bn. Cancellation rates are still higher than in 2019. Chief executive Brian Chesky was bullish on the outlook and a change in the way people approach travel. Shares are down about 37% from the February peaks. Meanwhile shares in Disney declined 4% in the after-hours market as it missed on subscriber growth to its streaming service. Disney+ now has 103.6m subscribers; analysts had estimated 109m. The streaming service has been the big plus point over the last year as parks and cruises have been shuttered, so investors are disappointed that growth in this area is not as strong as they expected.

The dollar is a little on the defensive as the cooling in Treasury yields cools the heels of the bulls. Gold is higher, reclaiming the 38.2% retracement area. Higher interest rates tend to be bad for gold, but rising inflation is good, so the market is in a bit of a tussle to see where real rates are going. With the Fed still seen keeping its thumb firmly pressed on shorter-dated yields, rising inflation expectations would tend to support the bull case for gold. Looking ahead to today’s data, watch for US retail sales at 13:30 BST, expected at +1% on the headline reading and +0.5% for the core.

Volgende week: Amerikaans consumentenvertrouwen wankelt terwijl rente op staatspapier stijgt

Als we naar de komende week kijken, zien we het Amerikaanse consumentenvertrouwen wankelen, ondanks het feit dat er meer stimulansen aankomen. Stijgende rente op staatspapier kan potentieel ook grote impact hebben op de markten. De Nieuw-Zeelandse economie lijkt aan kracht te winnen, in aanloop naar de verklaring van de RBNZ over de beleidsrente, terwijl Airbnb als aanvoerder van de large caps komende week met zijn eerste winstaankondiging als beursgenoteerde onderneming komt.

Het Amerikaanse consumentenvertrouwen is wankel

Volgende week worden de officiële cijfers over het consumentenvertrouwen in de VS gepubliceerd; het lijkt erop dat dit vertrouwen tot nu toe in februari is gedaald.

Voorlopige data van de index van de Universiteit van Michigan wijzen op een daling van 79,0 in januari naar 76,2 in februari, tegen een consensus van 80,5-80,8.

Huishoudens met een laag inkomen, dat wil zeggen een jaarlijks inkomen van $75.000 of lager, lijken het sentiment negatief te beïnvloeden. Slechts 23% van de huishoudens in deze groep gaf aan dat zijn financiën verbeterd waren sinds 2014, en 71% gaf aan dat zijn inkomen verbeterd was.

Het is volgens onderzoeksdirecteur Richard Curtain interessant dat het consumentenvertrouwen is gedaald ten opzichte van vorig maand, ondanks het feit dat Joe Biden een zeer omvangrijk stimuleringspakket heeft beloofd. Er zit $1,9 biljoen aan te komen, waarvan minimaal $1.400 voor consumenten en extra steun voor kleine bedrijven. $900 miljard ging in december vorig jaar al naar huishoudens met een laag inkomen.

De steun komt eraan, maar op dit moment zijn consumenten pessimistisch.

Rentes & aandelen reageren stijgende obligatierendementen

Nu de rende stijgt, stijgt het rendement op obligaties, wat gevolgen kan hebben voor assetcategorieën zoals FX, effecten en misschien zelfs cryptomunten.

Afgelopen dinsdag maakte rente op staatspapier de grootste sprong in 3 maanden tijd. De rente op tienjarige staatsobligaties steeg met 9 basispunten en kwam boven 1,3%, het hoogste niveau in februari.

Zoals onze hoofdmarktanalist Neil Wilson eerder stelde, zijn er belangrijke factoren in het spel die een inflatoire impuls creëren, in het bijzonder:

  • Een hoog volumen pro-cyclische fiscale stimulansen
  • Ultra-los monetair beleid
  • Ingehouden vraag
  • Veel spaargeld

Europese aandelen dalen omdat investeerders zich zorgen maken over de onverwachte renteverandering en overvallen worden door de snelle verandering in absolute obligatierendementen. De inflatie in het VK steeg van 0,6% in december naar 0,7% in januari, als gevolg van stijgende kosten van meubels, huishoudelijke artikelen, restaurants en hotels, voedsel en transport.

Goud werd ook zwakker als gevolg van de stijgende obligatierente.

Dit is iets om in de gaten te houden, want stijgende rendementen hebben gevolgen in de investeringssector en financiële wereld.

Rente-aankondiging RBNZ – geen verandering op het kiwi-front

De Reserve Bank of New Zealand (RBNZ) komt volgende week met een rentebesluit en naar verwachting zullen er geen grote veranderingen zijn.

De Nieuw-Zeelandse economie toonde zich relatief veerkrachtig tijdens het pandemiejaar. Een snelle, strenge lockdown en extra grenscontroles beperkten de covid-19-schade, wat Nieuw-Zeeland in een beter dan verwachte economische positie bracht.

De Nieuw-Zeelandse dollar (NZD) had een goed jaar in 2020 door aanzienlijke stappen te zetten ten opzichte van de pond, euro en Amerikaanse dollar, en goed te reageren op de turbulente eerste helft van het jaar, toen er een grote sell-off plaatsvond.

Naar verwachting zijn er geen verdere stimulansen nodig voor Nieuw-Zeeland. Commentators denken ook dat de Nieuw-Zeelandse Centrale Bank geen negatieve rentes zal invoeren.

Australia New Zealand Banking Group, een van de grootste kredietverstrekkers, verwacht geen renteaanpassing van de RBNZ, deels vanwege de sterke NZD, maar ook omdat de arbeidsmarkt in het land er goed voor staat.

De arbeidskosten daalden in het vorige kwartaal, enigszins onverwacht, met 4,9%, en de onderbenutting van arbeid daalde in sommige belangrijke sectoren ook. Overheidsstimulansen in sommige sectoren van de economie helpen tekorten in andere sectoren, wat een zegen is voor werkgevers, werknemers en ook voor de economie als geheel. De export speelt ook nog steeds een ondersteunde rol.

In feite zijn de vooruitzichten op de korte termijn nog goed voor Nieuw-Zeeland. Sommigen verwachten dat de beleidsrente in 2024 zal gaan stijgen. De inflatie zal naar verwachting stijgen naar 2,5% tegen juni, maar kan terugvallen naar 0,8% in het volgende jaar. Uiteraard kijken we naar Nieuw-Zeeland, maar een grote verandering in monetair beleid zit er waarschijnlijk niet in volgende week.

Eerste winstaankondiging van Airbnb als beursgenoteerde onderneming

Airbnb ging in december 2020 naar de beurs en komt op 25 februari met zijn eerste winstaankondiging.

Uiteraard zullen we die cijfers moeten bekijken door een pandemische lens. Volgens het ingediende S1-formulier was het bruto boekingsvolume ten opzichte van een jaar eerder met 39% gedaald in 2020, tot $18 miljard, terwijl de inkomsten daalden met 32% naar $2,5 miljard in de 9 maanden tot september 2020. Verplichte lockdowns raakten belangrijke economieën zoals de VS, EU en het VK in april 2020, waardoor privéreizen tot stilstand kwamen.

Maar Airbnb heeft een sterke merkbekendheid, wat er wellicht aan bijdraagt dat deze aandelen het beter doen dan die van branchegenoten. Met een marktkapitalisatie van ongeveer $120 miljard, streeft het bedrijf rivalen zoals Expedia ($22 miljard), Tripadvisor ($5 miljard) en zelfs Booking.com ($91 miljard) voorbij. Het aantal aanbieders bleef relatief stabiel en daalde slechts met 2% gedurende de pandemie, naar 5,6 miljoen registraties in september 2020, tegen 5,7 miljoen in december 2019.

Langdurige verblijven (boekingen van meer dan 28 dagen) daalden in april 2020 met slechts 13% ten opzichte van een jaar eerder, traditioneel gezien de slechtste maand voor hotelboekingen, maar stegen tussen mei en september van dat jaar.

Airbnb denkt een markt te kunnen aanboren ter waarde van $3,2 biljoen, waarmee het bedrijf waarschijnlijk interessant blijft voor investeerders. Volgens commentators heeft Airbnb een zeer groot potentieel als het gaat om zijn drie belangrijkste diensten:

  • $1,8 biljoen – Kortdurende verblijven
  • $210 miljard – Langdurige verblijven
  • $1,4 biljoen – Experiences

Sterker nog, Airbnb had 247 miljoen gasten in 2019, goed voor 3,8% van de geschatte 6,5 miljard wereldwijde overnachtingen dat jaar. Als slechts 10% van het marktpotentieel wordt benut, kan Airbnb $340 miljard per jaar in de wacht slepen.

De resultaten van Airbnb zullen we in ieder geval met interesse volgen. Ze zullen iets zeggen over de impact van de pandemie op Airbnb en tonen of de basis sterk genoeg is om de storm te doorstaan.

De vooruitzichten zijn misschien al goed. Het investeerdersvertrouwen lijkt hoog. Aandelen Airbnb stegen 200% na de beursgang, en op 15 februari werden ze verhandeld rond hun recordniveau.

Belangrijke economische data deze week

Date  Time (GMT)  Currency  Event 
Tue Feb 23  3.00pm  USD  CB Consumer Confidence 
       
Wed Feb 24  1.00am  NZD  Official Cash Rate 
  1.00am  NZD  RBNZ Monetary Policy Statement 
  1.00am  NZD  RBNZ Rate Statement 
  1.00am  NZD  RBNZ Press Conference 
  3.30pm  USD  US Crude Oil Inventories 
       
Thu Feb 25  1.30pm  USD  Prelim GDP Q/Q 
  3.30pm  USD  US Natural Gas Inventories 

 

Belangrijke cijfers deze week

 

Date  Company  Event 
Mon 22 Feb  Berkshire Hathaway  Q4 2020 Earnings 
  Palo Alto Networks  Q2 2021 Earnings 
     
Tue 23 Feb  Home Depot  Q4 2020 Earnings 
  Square  Q4 2020 Earnings 
  HSBC  Q4 2020 Earnings 
  Thomson Reuters  Q4 2020 Earnings 
     
Wed 24 Feb  NVIDIA  Q4 2021 Earnings 
  Lowe’s  Q4 2020 Earnings 
  Royal Bank of Canada  Q1 2021 Earnings 
  Budweiser  Q4 2020 Earnings 
  National Bank of Canada  Q1 2021 Earnings 
  Puma  Q4 2020 Earnings 
     
Thu 25 Feb  Salesforce  Q4 2021 Earnings 
  Airbnb  Q4 2020 Earnings 
  Vale  Q4 2020 Earnings 
  Toronto-Dominion Bank  Q1 2021 Earnings 
  Moderna  Q4 2020 Earnings 
  Bayer  Q4 2020 Earnings 
  Dell  Q4 2021 Earnings 
  HP  Q1 2021 Earnings 
  Etsy  Q4 2020 Earnings 
  Telefonica  Q4 2020 Earnings 
     
Fri 26 Feb  Deutsche Telekon  Q4 2020 Earnings 
  BASF  Q4 2020 Earnings 

IPO frenzy stateside, no-deal Brexit preparations ramp

Shares in Airbnb surged on debut, closing above $144 on their first day of trading after listing at $68. The more-than-doubling in the share price reflects huge investor interest, particularly in the retail space, as well as significant excess liquidity that is finding a home wherever it can. There is a strong fear of missing out on these mega IPOs, and investors seem very willing to discard usual valuation sensibilities to get on board. DoorDash only slipped by 1.8% on its second day of trading after soaring on its debut the day before. With a market cap of $68bn for Airbnb let’s just not talk about valuation and earnings multiples.

 

Preparedness for a no-deal Brexit is now the order of the day as both the EU and UK are talking impasse. Sunday’s deadline may be like all the rest (and be pointless) but there are only 3 weeks until January 1st so time really is running out. Sterling has been relatively unscathed so far but this morning GBPUSD broke down at the week lows at 1.32250 this morning to hit its weakest in almost a month. No deal risks are rising so the market is trying to price it – the problem is the binary nature of the outcome which leave the market only able to guess at fair value.

 

Yesterday, the European Central Bank (ECB) conformed to expectations by expanding its emergency asset purchase programme by an additional €500bn and extended the duration of the scheme to March 2022. Christine Lagarde suggested that the €1.85bn package would not be used fully used, which brought the ceiling vs target debate back into play. At the same time, EU leaders passed the €1.8tn budget after Hungary and Poland dropped their objections, paving the way for payments to be made next year. Meanwhile, US CPI inflation rose a little faster than expected in November and initial jobless claims were worse than expected, hitting 853k vs the 725k forecast. It points to weakness in the economy as cases have risen in recent weeks, eroding confidence in the recovery without a stimulus plan on hand to bridge the gap until vaccines are rolled out en masse.

 

European markets traded a little weaker early on Friday, with the major bourses down around 1% following on from a softer session on Wall Street that left the S&P 500 and Dow Jones lower but the Nasdaq rose a touch. No-deal Brexit fears are probably taking the shine off European equities, whilst there has been any significant catalyst from the US as lawmakers continue to discuss stimulus without getting a deal over the line. 

 

Chart: FTSE 100 lower, 6520 is the key support level 

FTSE 100 lower, 6520 is the key support level

Airbnb IPO date set for Dec 9th

Airbnb looks set to go ahead with its long-awaited IPO on Dec 9th, with the shares to begin trading on Dec 10th. The shares are expected to price at $44-$50 with the listing to raise around $2.5bn. Some 55m shares will be sold with a greenshoe option for 5m more if demand is high. The pricing would indicate a valuation of almost $30bn at the top of the range. 

It comes as DoorDash estimates that its IPO will price shares at $90-95, above the $75-$85 range set out only last week. The shares are expected to trade on the New York Stock Exchange under the symbol “DASH.” 

November was a particularly strong month for US equities, with the Dow Jones notching its best month since 1987 and the Russell 2000 recording its best-ever month. Demand for equities remains strong but these IPOs will be an important gauge of exactly where investor sentiment lies heading into the Christmas period and the New Year. Big November rallies often leaves December a little soft, with the Santa Rally essentially being pulled forward. If Airbnb or DoorDash fail to fly it might signal some trouble under equity market bonnet. 

Airbnb financials 

The company generate a profit of $219 million in the third quarter of 2020, on $1.34 billion in revenue. This was down fractionally from the $227 million in profit during the same quarter last year, which was its only profitable quarter in 2019, coming on $1.65 billion in revenue. 

However, the onset of lockdowns due to the pandemic made for a very challenging first half of 2020 for Airbnb as it chalked up net losses of $916 million on revenue of $1.18 billion. The company, which plans to list on the Nasdaq under the ticker ABNB, provided detailed customer and revenue figures.

You can read more on Airbnb financials in this post. 

Airbnb IPO coming this year: what you need to know

Airbnb is pressing ahead with its stock market listing with the company filing its S-1 form at the US Securities and Exchange Commission and a planned IPO date before the end of 2020. Will it be another unprofitable dog of a tech unicorn or a GOAT (Go Out And Travel) favourite in 2021?

The company reports it made a profit of $219 million in the third quarter, on $1.34 billion in revenue. In a filing on Monday, November 16th, management explained this was down fractionally from the $227 million in profit during the same quarter last year, which was its only profitable quarter in 2019, coming on $1.65 billion in revenue.

However, the onset of lockdowns due to the pandemic made for a very challenging first half of 2020 for Airbnb as it chalked up net losses of $916 million on revenue of $1.18 billion.

The company, which plans to list on the Nasdaq under the ticker ABNB, provided detailed customer and revenue figures. Here’s a snapshot of the key metrics and financials.

Pandemic booking trends

Gross nights and experiences booked

  • Material contraction on a year-over-year basis, with a low in April 2020, down 72% year over year.
  • From April through June 2020, the company saw a steady rebound in gross nights and experiences booked before cancellations and alterations, which were down 21% in June relative to the same period in the prior year.
  • From July through September 2020, gross nights and experiences booked have been stable, down approximately 20% relative to the same period in the prior year.

Cancellations and alterations

  • Dramatic increase after the COVID-19 outbreak, as guests were either unable to travel or uncomfortable doing so.
  • While the number of nights and experiences cancelled in January 2020 was 13% of the gross nights and experiences booked that month, the number of nights and experiences cancelled in March and April 2020 exceeded the number of gross nights and experiences booked during those months.
  • From April to September 2020, cancellations and alterations as a percentage of gross nights and experiences booked initially declined significantly and then have remained relatively stable for the past several months.

Nights and Experiences Booked

  • Negative in March and April 2020.
  • By May 2020, gross nights and experiences booked had begun to recover, while cancellations and alterations began to fall, resulting in a return to positive Nights and Experiences Booked from May to September 2020.
  • From July through September 2020, Nights and Experiences Booked have been stable, down 28% relative to the same period in the prior year.
Monthly Nights & Experiences Booked Trends
2019 2020
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
In millions (except percentages)
Gross nights and experiences booked 30.5 28.3 28.4 38.3 32.8 19 8.7 16.4 26 28.3 26 23.9
 % YoY Change 31% 30% 35% 25% 17% -42% -72% -50% -21% -19% -21% -23%
(-) Cancellations and alterations 3.9 3.6 3.9 5 4.9 23.1 9.4 7.2 6.5 6.6 5.4 4.4
Cancellations and alterations as a % of gross nights and experiences booked 13% 13% 14% 13% 15% 122% 108% 44% 25% 23% 21% 18%
Nights and Experiences Booked* 26.6 24.7 24.5 33.9 27.9 -4.1 -0.7 9.2 19.5 21.7 20.6 19.5
 % YoY Change 31% 30% 35% 22% 12% -114% -103% -68% -31% -28% -28% -28%

Airbnb define Nights and Experiences Booked as net of cancellations and alterations.

Gross daily rate

  • Represents GBV per Night and Experiences Booked, all before cancellations and alterations. This measure is a useful proxy for the average daily rate (ADR) trend over this period; because the net metrics reflect elevated cancellations and were negative in March and April 2020, the net daily rate was not meaningful for those periods.
  • The year-over-year increase in gross daily rate from May to September 2020 was driven by faster recovery in North America and Europe, the Middle East, and Africa (EMEA) during this period, which have historically higher daily rates than Latin America and Asia Pacific.
  • The gross daily rate was also impacted by a mix shift toward entire home listings in non-urban destinations, which have higher daily rates.

Gross Booking Value before cancellations and alterations

  • Followed a similar trend to gross nights and experiences booked, materially declining on a year-over-year basis between March and May 2020.
  • GBV before cancellations and alterations recovered in June 2020, growing 1% year-over-year driven by the increase in gross daily rate.
  • From July through September 2020, GBV before cancellations and alterations has been stable, down less than 10% compared to the same periods in the prior year.

Gross Booking Value

  • Declined and rebounded as a result of the trends described above.
  • In September 2020, GBV was down 17% on a year-over-year basis, less than the 28% decline in Nights and Experiences Booked due to the growth in gross daily rate.
  • GBV reflects bookings made in a period for future nights or experiences and is a leading indicator for revenue, which is recognized during the period that stays and experiences occur.
Monthly Nights & Experiences Booked Trends
2019 2020
Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
$ in billions (except percentages & gross daily rate)
Gross daily rate $110.20 $110.23 $110.36 $122.51 $122.63 $104.35 $91.69 $135.73 $145.72 $133.84 $132.24 $127.84
 % YoY Change -1% -1% 0% 0% 1% -12% -21% 18% 27% 19% 21% 18%
Gross Booking Value before cancellations and alterations 3.9 3.6 3.9 4.7 4 2 0.8 2.2 3.8 3.8 3.4 3.1
 % YoY Change 13% 13% 14% 26% 19% -49% -78% -41% 1% -4% -4% -9%
Gross booking Value 26.6 24.7 24.5 4.2 3.5 -0.9 -0.6 1.1 2.7 2.8 2.7 2.5
 % YoY Change 31% 30% 35% 24% 15% -127% -119% -69% -17% -19% -14% -17%

Airbnb define Gross Booking Value as net cancellations and alterations.

Financials

Year Ended December 31st Nine Months Ended September 30
2017 2018 2019 2019 2020
In thousands (except share amounts)
Consolidated Statements of Operations Data
Revenue $ 2,561,721 2,651,985 4,085,239 2,698,239 2,518,935
Costs & expenses
Cost of Revenue 647,690 864,032 1,196,313 902,695 666,295
Operations & Support 395,739 609,202 815,074 600,788 548,369
Product Development 400,749 579,193 976,695 693,796 690,677
Sales & marketing 871,749 1,101,327 1,621,519 1,184,506 545,510
General & administrative 327,156 479,487 597,181 490,262 421,082
Restructuring charges n/a n/a n/a n/a 136,969
Total costs & expenses 2,643,083 3,633,241 5,306,782 3,872,047 3,008,902
Income (loss) from operations -81,362 18,744 -501,181 -173,604 -489,967
Interest income 32,102 66,793 85,902 68,661 23,830
Interest expense -16,403 -26,143 -9,668 -6,801 -107,548
Other income (expense), net 6,564 -12,361 13,906 42,130 -115,751
Income (loss) before income taxes -59,099 47,033 -411,703 -69,614 -689,436
Provision for income tax 10,947 53,893 262,636 253,187 7,429
Net loss $ -70,046 -16,880 -674,339 -322,081 -696,865
Net less per share attributable to Class A and Class B common stockholders, basic & diluted $ -0.27 -0.07 -2.59 -1.24 -2.64

What we have learned from the filing

  • Revenue growth was declining before the pandemic – from around 80% in 2016 to just 32% in 2019.

Management conceded: “Our revenue growth has slowed in recent periods and there is no assurance that historic growth rates will return. Our year-over-year growth rate in revenue decreased in 2019 as compared to 2018 and also decreased in 2018 as compared to 2017.”

  • Regulation is becoming more of a headache as cities clamp down on short-term lets.

Management say: “Laws, regulations, and rules that affect the short-term rental and home sharing business may limit the ability or willingness of hosts to share their spaces over our platform and expose our hosts or us to significant penalties, which could have a material adverse effect on our business, results of operations, and financial condition.

“We are subject to a wide variety of complex, evolving, and sometimes inconsistent and ambiguous laws and regulations that may adversely impact our operations and discourage hosts and guests from using our platform.”

  • It’s never been profitable

“We have incurred net losses in each year since inception, and we may not be able to achieve profitability. We incurred net losses of $70.0 million, $16.9 million, $674.3 million, and $696.9 million for the years ended December 31, 2017, 2018, and 2019, and nine months ended September 30, 2020, respectively. Our accumulated deficit was $1.4 billion and $2.1 billion as of December 31, 2019 and September 30, 2020,” the filing states.

  • It’s not doing as badly as peers – other booking sites have fared worse – the pandemic has made the Airbnb private getaway more appealing than staying in a hotel/resort. However, Experiences have not done as well as hoped – there is no breakout of the figures for this despite launching four years ago.

But…the outlook is much stronger for 2021 now that vaccines are coming. Airbnb could benefit from the GOAT trade.

For more information on how to trade IPOs, please see our guide.

Airbnb IPO: when can you buy and sell Airbnb shares?

Accommodation website Airbnb is set to be one of the largest stock market listings of the year, after the group filed a draft S-1 registration document with the US Securities and Exchange Commission.

In a statement, Airbnb said the number of shares to be offered and the price range for the proposed offering have not yet been determined. The date of the initial public offering (IPO) is not known, but is expected to take place after the SEC completes its review process. A lot will no doubt depend on market conditions.

We noted earlier in the year that the run-up in stocks after the March trough was offering companies a window of opportunity to get their stock listings out the door.

How much is Airbnb worth?

The company raised $2 billion in two separate tranches in April of this year, whilst it cut staff numbers by 25% to help it survive the enormous impact of the pandemic. This valued the company at $18bn but this was about half what it notionally worth in 2017. In May, chief executive Brian Chesky said the company expects to deliver revenues in 2020 of about half the $4.8bn generated last year.

Part of this is down to the pandemic – it has been a terrible time for the travel sector in particular and about $330bn of revenues has been lost globally, according to the US Travel Association. But Airbnb has enjoyed a surge in bookings as lockdown restrictions ended, particularly in rural areas, where bookings rose 25%.

The fact that Airbnb has not decided to shelve its anticipated IPO this year is a sign of renewed confidence, or it’s a sign the company needs to raise capital fast.

What is Airbnb?

Airbnb launched in 2008 and now has over 150 million users who offer private rentals of apartments and rooms in over 65,000 locations across the globe. It includes Amazon founder Jeff Bezos amongst its early investors. By the end of 2019 analysts were expecting the Airbnb IPO to see the company achieve a valuation of $42 billion.

How to trade Airbnb

Markets.com will be offering a grey market on Airbnb ahead of the IPO, which will let you speculate on the share price before it debuts on the stock market. The grey market price is based on the market capitalisation of the company after its first day of trading. As ever once it has completed the listing you will be able trade the shares by CFD trading or Spread Betting, or invest via share dealing.

Another way to take advantage of the Airbnb IPO is to trade the Renaissance Capital ETF (IPO), which is an index-like basket of companies that went public in the last years.

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