What’s up for Airbnb?

Airbnb, the online marketplace that connects people who want to rent out their homes with people who are looking for accommodations, is going public this year. What should you know ahead of the IPO?

Why is it important?

In general

2019 has already cheered up investors with big initial public offerings of Lyft and Pinterest. The market interest is sparked, and Airbnb’s IPO will definitely draw a lot of attention.

For investors

Unlike Lyft Inc. and Uber, Airbnb is profitable. As it’s private for now, we don’t have a lot of details about its financial performance. Yet, according to Techcrunch, the company’s revenue exceeded $1 billion in Q3 2018. Wall Street analysts expect Airbnb’s revenue to rise from $3.8 billion last year to $8.5 billion in 2021. The inspiring financial prospects will certainly make the stock attractive for investors.

On the other hand, it’s necessary to mention that the company faces challenges as well. In particular, it will have to deal with increasing calls for regulation: while hotels pay tourism taxes, Airbnb doesn’t and many want that to change. Another problem is tough competition with other booking services such as Booking Holdings Inc., Trivago NV, HomeAway, etc. Moreover, the global hotel chain Marriott International Inc. has gone into home-sharing services as well. It’s launching a platform offering 2,000 “premium and luxury homes” in more than 100 locations in the US, Europe, Caribbean, and Latin America.

For sure, Airbnb is also active in this race. It invested $200 billion in an Indian hotel company OYO, which provides budget accommodation in over 230 cities, and partnered up with RXR Reality to soon open a full-service hotel in New York. This means that Airbnb is eager to stay flexible and diversify its business.

For traders

All in all, we get a combination of a promising business and high uncertainty. The first months after the IPO will definitely be difficult for traders. Example of Lyft shows that volatility will be extremely high with price moves which are often not caused by particular reasons. The market will take time trying to find where the price for Airbnb should be.

Notice that we don’t have a distinct time reference for the IPO. In March co-founder Nathan Blecharczyk said that they were not sure that the company would go public this year. More recently CEO Brian Chesky said that the company would be “ready a little bit later this year and then any point from then” it could happen. It means that we have more time to estimate the market’s sentiment. Airbnb will reveal more info about itself when it files for IPO.

After IPOs, the trading starts. Stocks can be traded as CFDs at eToro.