Making Sense Of Airbnb Stock’s $75 Billion Valuation

Airbnb (NASDAQ: ABNB), the online vacation rental marketplace, went public last week, with its stock almost doubling from its IPO price of $68 to about $125 currently. This puts the company’s valuation at about $75 billion as of Tuesday. That’s more than Marriott - the largest hotel chain - and Hilton hotels combined. Does Airbnb - which has yet to turn a profit - justify such a valuation? In this analysis, we take a brief look at Airbnb’s business model, and how its Revenues and growth are trending. See our interactive dashboard analysis for more details. In our interactive dashboard analysis on on Airbnb’s Valuation: Expensive Or Cheap? we break down the company’s revenues and current valuation and compare it with other players in the hotels and online travel space. Parts of the analysis are summarized below.

How Have Airbnb’s Revenues Trended In Recent Years?

Airbnb’s business model is simple. The company’s platform connects people who want to rent out their homes or spare rooms with people who are looking for accommodations and makes money primarily by charging the guest as well as the host involved in the booking a separate service fee. The number of Nights and Experiences Booked on Airbnb’s platform has risen from 186 million in 2017 to 327 million in 2019, with Gross Bookings soaring from around $21 billion in 2017 to about $38 billion in 2019. The portion of Gross Bookings that Airbnb recognizes as Revenue rose from $2.6 billion in 2017 to around $4.8 billion in 2019. However, the number is likely to fall sharply in 2020 as Covid-19 has hurt the vacation rental market, with total Revenue likely to fall by about 30% year-over-year. Yet, with vaccines being rolled out in developed markets, things are likely to start returning to normal from 2021. Airbnb’s large inventory and affordable prices should ensure that demand rebounds sharply. We project that Revenues could stand at about $4.5 billion in 2021.

Full article HERE!