Airbnb IPO

Airbnb is reportedly planning to file for its IPO in August 2020, with the listing expected to occur before the end of the year. Here, we explain how you can get exposure to Airbnb – both before and after it lists.

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Contact us: 0800 195 3100

Why trade Airbnb's IPO with IG?

Trade before the IPO

Get exposure before the listing by trading Airbnb’s predicted market cap

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How to trade the Airbnb IPO

You can trade the Airbnb IPO before and after it lists on the stock market.

  • Before the listing
  • After the listing

Trade IG's ‘grey market’ ahead of the Airbnb listing, allowing you to speculate on the company’s share price before it lists. Our grey market price is based on our prediction of Airbnb’s market cap at the end of the first trading day.

With our grey market, you can:

  • ‘Buy’ if you think the market cap will be higher than the price indicated
  • ‘Sell’ if you think the market cap will be lower than the price indicated

What is a grey market and how does it work?


Click through to see the Airbnb grey market analysis chart

You could trade Airbnb after the listing by speculating on its share price movements or investing in its shares.

With IG, you can:

Trade or invest in similar stocks today

If you want to get exposure to other companies in the travel industry right now, you can choose between stocks such as Expedia and Booking Holdings.


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When is Airbnb’s IPO?

Airbnb is expected to list before the end of 2020, following reports that it would confidentially file the necessary paperwork with the Securities and Exchange Commission (SEC) in August 2020.

The company was originally expected to list much earlier in 2020, but had to put its plans on hold when bookings and revenues fell dramatically as a result of the coronavirus pandemic. Airbnb has since let 25% of its staff go to cut costs, and diversified to offer a range of online experiences.

What is Airbnb likely to be valued at when it lists?

It is not yet known what Airbnb’s value will be when it lists. Its most recent funding round in April 2020 saw it raise $1 billion at a pre-money valuation of $17 billion, so it is likely to target a valuation above the post-money figure of $18 billion.

However, any valuation close to this level would be much lower than pre-coronavirus estimates. That’s because private investors were reportedly trading indirect stakes at prices that valued the company at closer to $42 billion in November 2019.2

Despite this – if the April 2020 valuation remains unchanged – Airbnb will have one of the largest market caps in the hotel and online travel agency industry. TripAdvisor is currently valued at $2.98 billion, with Expedia at $11.96 billion. However, takes the lead at $72 billion (all figures correct on 12 August 2020).

Our analysis on the Airbnb IPO

By Sam Dickens, portfolio manager
14 August 2020

Airbnb, the leading home-sharing platform, has made plans to IPO before the end of 2020. Rumours of a long-awaited stock market debut date back to 2015, with investors waiting patiently for the opportunity to invest in a start-up which boasts a global brand but has also proven it can be profitable in its own right – unlike many of the tech unicorns that floated in 2019.

However, it does seem a strange time to go public given how hard the travel sector has been hit as a result of the coronavirus pandemic. Management had planned to initiate the IPO in March, but one would expected a longer delay, at least until a vaccine had been found and approved, to avoid the risk of listing amid a second lockdown and seeing revenues crumble once again.

A key reason for the IPO is to meet employee share obligations, which enable long-serving employees cash-in their shares. Start-ups generally choose to issue shares to the public to raise extra cash to fuel future growth, but Airbnb is in the enviable position where it has an estimated $4 billion in cash on its balance sheet (it added a further $2 billion through two separate debt issues in April this year).

But unlike recent flops such as WeWork, Airbnb’s business model has already proven it can generate a positive cash flow, which means the company can grow organically and not have to rely on external funding to survive.

The chart below looks at the share prices of three listed technology-focused companies that operate within the travel and hospitality sector:, Expedia and TripAdvisor. On average, the share price for the three stocks has fallen by around 18.6% since the start of 2020, shaving off close to $16.5 billion in market value. This is while the broader US stock market has actually risen in value over the year, by 4.5%.

The sharp decline in the share price of these companies is largely due to a steep drop in revenue during the pandemic, which led to heavy losses over the first half of the year. The table below shows that revenue declined by between 52%-58% for the three firms in the first half of 2020, compared to the same period in 2019. Expedia TripAdvisor
Revenue H1 2019 ($m) 6,687 5,762 798
Revenue H1 2020 ($m) 2,918 2,775 337
% Change -56% -52% -58%

Source: Bloomberg

According to reports, Airbnb has suffered a similar drop. Q2 2020 revenue is reported to have fallen to $335 million, a 67% decline compared to Q2 2019.3

This will no doubt weigh on its potential valuation at its IPO. Airbnb was last valued at around $35 billion in 2019. But, according to a report by Bloomberg, warrants connected to the recent debt issuance valued the company at $18 billion – almost half the previous valuation.4

Looking at the wider stock market, investors are largely discounting 2020 as a non-event for earnings but expect them to snap back in 2021. If earnings growth fails to materialise, share prices are likely to fall back to support more realistic price multiples.

But looking at what analysts currently expect, Expedia and TripAdvisor to earn in 2021 may shed light on a fair valuation for Airbnb. Expedia TripAdvisor Airbnb
2019 ($bn) 15.1 12.1 1.6 4.0*
2020 (e) ($bn) 7.7 5.7 0.7 2.5*
2021 (e) ($bn) 11.6 8.4 1.1 3.8*
Change 2019-2021 (%) -23% -30% -31% -5%
Forward price-to-sales 6.4 1.5 2.8 7.0*
Valuation ($bn) 74.4 12.5 3.0 26.6*

Source: Bloomberg
* IG analyst estimate on 14 August 2020

Looking at the forward price-to-sales multiples shows that is currently valued at a higher ratio compared to Expedia and TripAdvisor. This is part due to its ability to convert a higher proportion of its revenues into earnings, with a three-year average EBITDA margin of 39% compared to 16% and 18% for Expedia and TripAdvisor, respectively. In a report by The Information, an EBITDA margin of 25% was touted for Airbnb.

Price multiples are also highly influenced by expected growth rates for revenue. While Airbnb do not publish a full set of financial accounts, average annual revenue growth over the last five years is estimated to be 35%; far greater than which has seen sales rise by 12% a year on average.

The combination of higher potential revenue growth but a slightly lower EBITDA margin suggests a slightly higher price-to-book ratio could be used to value Airbnb. In our estimate we have used a forward price-to-book ratio of 7.0. As a sense check, the average forward price-to-book ratio for the S&P 500 is currently 3.9.

Using a very simplified valuation model this estimated forward price-to-sales ratio hints that a valuation around $26-27 billion might be a sensible target (as of 14 August 2020).

Of course, there are many different ways to arrive at a valuation for a firm; from a discounted cash flows approach to a comparable company analysis, and analysts will use a number of approaches to arrive at a valuation estimate. We used the forward price-to-sales ratio purely due to the lack of financial data available for Airbnb since it does not have to disclose financial information.

Looking forward, future growth will depend on a wide range of influencing factors; from further expansion into the Asia-Pacific region to a growing popularity for staycations. Headwinds such as increased regulatory scrutiny could de-stable growth prospects, especially in the current environment where social issues such as affordable housing will become high on the political agenda.

What could the Airbnb share price be when it floats?

It is not yet known how many shares Airbnb will offer to the public, or at what price. Once the company decides to go ahead with its IPO, its chosen investment banks will use established valuation techniques to determine how many shares will be offered, and for how much money. In this case, Airbnb is said to be working with Morgan Stanley and Goldman Sachs to launch its IPO.

After the IPO, the share price will be determined by normal factors affecting supply and demand.

Why is Airbnb listing?

Airbnb has not yet issued a public statement on the listing, so it is not clear why it is listing at this time. However, it is likely hoping to cash in on increased interest in the IPO market following successful listings by Warner Music Group and Lemonade earlier in the year.

The company may also require a further cash injection to see it through the coronavirus crisis, having cut revenue expectations on the back of reduced demand for holiday accommodation worldwide.

Who are Airbnb’s current investors?

Airbnb’s current investors are Silver Lake, Sixth Street, CapitalG, TCV, FirstMark, Sequoia Capital, and dozens of other notable individuals and businesses. In total it has 57 investors, of which 14 are lead investors and from which it has raised $5.4 billion in funding. Silver Lake and Sixth Street are the most recent Airbnb financiers.

What’s the outlook for Airbnb?

Airbnb has had major success since its launch in 2008, quickly becoming one of the travel industry’s dominant players. However, revenue forecasts have suffered in the short term as a result of the coronavirus pandemic, which has caused demand for holiday accommodation fall dramatically this year.

To remain competitive, Airbnb has been working to diversify its offering to include complimentary travel services and experiences in recent years – including online experiences in 2020. Plans also include launching a loyalty programme, attracting higher quality hotels, and creating a corporate travel business.

By the year 2022, experiences, transportation and other unexplored segments could make up a considerable part of the business – even though it may still rely heavily on accommodation to create revenue.

What is Airbnb’s business model?

Airbnb’s business model is based on helping travellers to book privately owned accommodation online. It acts as a broker between traveller and property owner – allowing the owner to list their space for rent and connecting them to the traveller. Airbnb also manages payments, acts as a mediator in the case of grievances, and lists reviews of both hosts and travellers.

The accommodation listed by Airbnb ranges from private homes to hotel rooms, and even novelty lodges such as treehouses. There are over 7 million listings in over 220 countries and regions to choose from. Besides accommodation, the business also offers restaurant and experience bookings – an area that has seen increased focus this year as a result of the coronavirus pandemic. Users can choose from more than 50,000 activities, many of which can be experienced online.

The strength of the Airbnb business model lies in its competitive pricing, the unique user experience and its huge global presence.

How has Airbnb been performing?

Airbnb has been performing poorly in 2020 compared to previous years, as a result of the coronavirus pandemic. Chief executive officer (CEO) Brian Chesky announced a 25% staff cut earlier in the year to reduce costs, stating that he expected revenues to be less than half of 2019 figures ($4.8 billion).

While the company does not release earnings reports, recent estimates suggest that Airbnb made a loss of $322 million in the first nine months of 2019 with costs spiralling as it sought to expand its offering. However, the company is said to have made a profit in the two previous years as a result of rapid growth.

How the company performs in future years will depend on how quickly the coronavirus crisis comes to an end, and also how popular its experiential offering proves to be. Revenues are likely to grow rapidly once demand for holiday activities and accommodation begins to return to pre-Covid-19 levels.

Who are Airbnb’s biggest competitors?

Airbnb’s biggest home-sharing competitors are HomeAway, VacayHero and HouseTrip, to name a few. However, Airbnb’s presence across the globe far outweighs any of these companies. As for online travel sites, Airbnb shares the limelight with the likes of

While there are many similarities between Airbnb and other home-sharing services, it remains the forerunner in the market. Besides having more rooms listed than the top five hotel groups combined – a staggering 7 million – Airbnb also has more (and less conventional) options to choose from, such as castles, boathouses and treehouses.

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How do IPOs work?

IPOs are released when a company decides to start selling its shares to the public. The company will decide how many shares it wants to offer, and the investment bank will decide on the initial price of the stocks based on supply and demand.

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You can find our Airbnb IPO grey market in the ‘popular markets’ watchlist on our online trading platform.

Our Airbnb IPO grey market is the only way you can trade Airbnb before its listing, and is exclusively available to IG clients.

Yes, you could make money from the Airbnb IPO. You could make money with IG’s grey market if you correctly predict the direction of the Airbnb market cap before the IPO. Or, you could make money by trading Airbnb's shares after it goes public if you correctly predict how the share price will move. Alternatively, you can buy the shares outright and profit if the share price goes up.

A grey market enables you to speculate on a company’s estimated market cap before its shares are released. If you think the estimated value of the company is over- or under-priced, you can use the grey market to back your prediction.

It’s important to note that, when you decide to trade the grey market, you’re trading on the estimated valuation. The official market valuation (what the market thinks the stock is worth) is released after the first day of trading – and it is based on the demand shown by the market that day. When this happens, the grey market will settle.

There is no single person or company who owns Airbnb. It does have many private investors, but most of the Airbnb stock belongs to the founders, Brian Chesky, Joe Gebbia and Nathan Blecharczyk, who started the business in 2008.

Airbnb makes money by charging travellers service fees for booking accommodation through their website or app. The service fee can be up to 12% of the reservation costs. The more expensive the booking, the lower the fee. Hosts are also charged a processing fee of up to 3% of the booking total.

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1Based on revenue excluding FX (published financial statements, June 2020).
2Financial Times, 2020.
3Bloomberg, 2020.
4The Information, 2020.

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