It’s here…and I got it…Airbnb’s IPO filing is finally released. Today, I’ll
give you some of the major details of the filing as the company continues its march
toward going public …so stay tuned. Welcome to Healthy, Wealthy, and Wise, the
channel that has evolved to talk about all the big, and not-so big companies going public,
whether it’s by a traditional IPO, a SPAC or a direct listing. And today, we have a
BIG one…Airbnb. You know it’s a big one when a company’s name becomes a household
name for the product or service itself, like Coke is to cola, Google is to search and as
Airbnb is to vacation rentals. What would be great is if you let me know in the comments
if you’re all in on buying the stock no matter what, or if you’re still deciding
if it’s for you, just type in yes, no, or maybe…I always like to know what you guys
are thinking And one more thing, if you’re a host for Airbnb and looking to invest in
the company, let us know that, too…I think that would be a strong recommendation from
those of you who know more about how the company operates firsthand. And as you’re typing
in your answers, as always, I want to thank everyone in the community for your fantastic
support of me and the channel. And for those of you new here, my name is Kevin and I want
to welcome you to the channel for the first time. If you end up enjoying this video and
want to see more on Airbnb and other big IPOs like Doordash, who we just started to cover
last week after they filed their IPO, we'd love to have you join our community, it's
totally free...you just gotta press that little red subscribe button.
So today, our focus is on looking at the details of Airbnb that have come directly from the
company itself, and that comes right from their S-1, or what we call the IPO filing.
We’ll talk about the highlights of the filing, including the major consideration of investing
in Airbnb during a life altering pandemic, and we’ll do that by looking at the financials
and key metrics of the company and how they’ve been impacted by the virus, so stay tuned
for that. This video will be one in a series of videos on Airbnb that I’ll have for you
that will get you ready for when the company begins to trade, which likely begins next
month...and I know you want to hear the exact date, but we don’t have that yet, that's
why you have to stay tuned. These series of videos will be similar to what we did for
other big names, like Palantir and Snowflake. I’ll tell you upfront that I haven’t decided
on if I will invest in the company yet, so these series of videos will be my journey
on coming to a conclusion, so I welcome you to come along with me. Our upcoming videos
will cover addendums to the initial filing, taking a deeper look at the business, pricing
expectations and valuations, and of course, the day it will start trading publicly. Plus
I’ll share my own thoughts and analysis on the stock as we work through all of the
information…and I’ll share that final analysis in a comprehensive video right before
it hits the market, so definitely have your notification bell turned on so you don’t
miss those videos as soon as they come out. But like you, I’m just getting that first
look of the data from the filing, so this is where we need to start in today’s video...so
let’s dive into it. Right off the bat in the introduction of the
filing, I learned why it’s called Airbnb…I actually didn’t know what the Air part was
about…and for those of you who don’t know either, it’s because back in 2007, the founders
decided to rent out airbeds in their San Francisco apartment to help pay their rent. Airbeds,
yep, I have no idea why I didn’t figure that one out. Anyway, as their creation story
goes, they came up with this idea when an international design conference was coming
to town, and every hotel was sold out. So they quickly created a website, AirBedandBreakfast.com
and booked their first guests. And apparently what ended up really making the concept work
was treating their guests like they were old friends from out of town and giving them a
tailored experience to what the city was all about.
The second part to making it work was figuring out how to make strangers feel comfortable
enough to stay in each other’s homes. That’s the part that would’ve made me say, this
isn’t going to work. But to the founders’ credit, they devised a solution with an online
platform that combined host and guest profiles, integrated messaging, two-way reviews, and
secure payments. And so here we are today. I don’t know about you, but I’m always
both inspired when I hear the background of how companies are started, and yet frustrated
that I didn’t think of it first. Anyway, needless to say, the idea of Airbnb
caught on. As of September 30th, the company reports to having had over 4 million hosts
around the world in over 220 countries, with 86% of those hosts being located outside of
the United States. Hosts have had 7.4 million available listings of homes through September,
of which 5.6 million were active listings. And then from a guests perspective, for 2019,
54 million active bookers worldwide booked 327 million nights and experiences on their
platform, with 69% of their revenue being generated by stays from repeat guests. And
going back to their founding, the company reports that there have been over 825 million
total guest arrivals on Airbnb. So if you’re like me, and have never hosted
with Airbnb, you might be wondering how it works…such as how much money do the hosts
keep and how much does Airbnb get? Well the filing provides us that answer through an
example. I’ve put up a screenshot that shows an example of how much money Airbnb makes
from a $100 booking. To the host, Airbnb charges a 3% fee and then on the guest side, they're
charged a guest fee that, according to the company, can vary depending on different factors,
such as booking duration or geography. From this example, you can see that from a $100
booking, Airbnb makes $15: $3 dollars from the host and $12 dollars from the guest. And
that fee covers things like payment processing, scheduling, and other support services. So
as a potential investor, this was helpful for me to get a better idea of how they make
money with their business. So now that we’re talking some money, let’s
take a look at the financials. But before we do, I want to ask you for a favor, and
that is to please press that like button if you’re enjoying the video; it really helps
the channel get more exposure on YouTube and lets me know that this is the kind of videos
you want more of. Thanks! Ok to the financials. On the revenue side,
looking at their last full years of reporting ending on December 31st, revenue grew to just
over 4.8 billion dollars in 2019, up 32% from 2018. Of course these time periods don’t
include the effects of the pandemic, so looking at the last 2 columns on your screen, we can
compare the first 9 months of this year ending on September 30th where we see the significant
impact. For 2020, revenue was down 32%, from about 3.7 billion dollars to 2.5 billion dollars.
What’s also striking, if not expected, is how their net loss more than doubled in that
same time frame. Now net losses are nothing new to the company as they’ve had a loss
for every year since their inception, however, you can see how the pandemic really hit them
hard when looking at the year over year numbers. Diving further into their numbers, we can
look at 2 of their key metrics, nights and experiences booked and gross booking value,
which is defined as the dollar value of bookings on their platform in a period that is inclusive
of host earnings, service fees, cleaning fees, and taxes. From this screenshot, you can see
the positive trend in the growth of bookings from 2017 to 2019, a growth of about 175%.
And you see similar growth in the gross booking value metric. But then, again, those last
2 columns show the effects of the pandemic, where bookings in the first 9 months of this
year were down about 59%. So that’s not good, but considering what
we’ve all gone through with this pandemic, we knew it would be down; this just tells
us by how much. Now we’ve heard that there’s been a recovery within those 9 months, particularly
from May onwards. So Airbnb gave us a chart on this as well. During those initial months
of the recovery, Airbnb saw some trends in how bookings were different than in years
past, in that domestic travel was recovering quicker than international travel, that travel
destinations were stronger within 50 miles of a guest’s home, that stays were longer,
perhaps driven by more work at home situations, and that travel outside of the top 20 cities
booked in 2019 was higher than for bookings inside those cities, as people look to stay
away from high density areas. Now what’s interesting to me is that there
was a very tangible recovery in bookings through July, where they recovered from 8.7 million
bookings in April to 28.3 million, but then as you can see on your screen, the numbers
start to drop again, with 26 million bookings in August, and then just 23.9 million in September.
And with a surge of infections in the 4th quarter, it’s likely that these numbers
will continue to go down. So we can expect some more drops in revenue, which obviously
isn’t optimal as Airbnb heads into their IPO. In fact, the company is already projecting
to expect greater year-over-year decline in Nights and Experiences Booked and Gross booking
value in the fourth quarter of 2020 than in the third quarter and greater year-over-year
increases in cancellations and alterations in the fourth quarter than in the third quarter.
These vaccines really can’t make it to market fast enough.
Going forward, the company still sees a big market opportunity available to them. They
estimate their total addressable market to be $3.4 trillion, including $1.8 trillion
for short-term stays, $210 billion for long-term stays, and $1.4 trillion for experiences.
They do note they are still using their 2019 data in their analysis, feeling that once
the pandemic is past us, that those numbers will be the best representation of their long-term
travel opportunity. Obviously within that market opportunity,
they don’t have it all to themselves as they will have competition from online travel
agencies and companies like VRBO and HomeAway. They also count the traditional hotel chains
and other listing sites as competitors, which makes sense, even though the experiences they
are offering are generally very different. With the data Airbnb is letting us see, they’re
hoping that investors will come to the conclusion that they have a solid business that, while
it's been hurt by the pandemic, that they have the model and market to succeed. Hopefully
the way I laid out this information in the video helps you to understand the numbers
better and lets you come up with some conclusions as to if Airbnb makes sense to invest in for
you. And just a couple more important things to
share from the filing. One is that right now, we don’t have any idea what the offering
size will be, what the anticipated pricing will be, or when the IPO itself will actually
happen. Those will come in amended filings, which I’ll be sure to keep you updated.
But what we do know is that when it does start to trade, we know how to find it: Airbnb will
be listed on the Nasdaq under the symbol ABNB. We’re still a lit bit away from the IPO
date, but now that the filing has been submitted, we’re getting close…it really should be
sometime in early December. As I said at the beginning of the video, I’ll make sure to
keep you up to date as more information comes out by releasing more videos on Airbnb and
share some of my own personal thoughts about the company right before trading begins. I
know I can count on my subscribers to stay informed and share updates in the comments…because
afterall, that’s what the community is all about, you learning from me, me learning from
you, and all of us learning from each other. Anyway, I hope everyone enjoyed this video…and
if you did, please remember to like it and share with your friends or even share the
link to your social media sites, afterall, the more we grow, the more we can, and will
do here. And if you’re not part of the community,
well that’s on you, because we’d love to have you onboard. And once you’re in,
you’ll be sure to keep up on all of the upcoming IPOs by watching our weekly featured
show, IPO This Week, as well as the more analytical videos that I put out on some of the companies
that investors have a lot of interest in such as Airbnb. I know I’m biased, but I think
this channel is a combination of the best and most concise way to stay up on all of
the companies going public without me trying to sell or push anyone on a company…and
I’m always working to try and make it better…so hang in there with me. But for now, let’s
wrap it here.Thank you for watching, and until next time, have a great day!