Airbnb This platform has a dream room for many people, Barbie’s house, Downton Manor’s bedroom, transparent bubble house on the cliff, private island… A local hotel with a local theme touches the user’s heart. Let them remember the Airbnb platform.
It’s not easy to impress users, and it’s not easy to impress investors. Since Airbnb is in a short announcement China announced that “Airbnb announced that it is expected to become a public company by 2020.” After that, any movement of Airbnb will be linked to the IPO, attracting investors’ attention.
▲ Airbnb Featured Homestay
But this new news is likely to reduce investor confidence in Airbnb.
The Information shows that in the first quarter of this year, Airbnb’s losses doubled from the same period last year. $306 million. Airbnb responded to this report in a statement “We can’t comment on this data, but 2019 is a very important investment year for our landlords and users.”
This news is likely to make potential investors feel uneasy. After all, there are cases of Internet companies that have been broken and listed, and there is a case of WeWork’s valuation plunging. Investors are now flustered when they hear “loss” and run faster than rabbits.
Even if someone compares Airbnb and IPO’s “live” to WeWork, the B&B short-term rental platform that conquered the world in the past eleven years is the next liquidated unicorn.
But the current situation, Airbnb will not be WeWork.
If you look at the first quarter profit and loss report, you will find that Airbnb’s investment in sales and marketing has increased by 58% over the same period last year. This increase is higher than other categories, such as product development. 51%, customer service increased by 30%.
In this regard, Airbnb’s financial situation is still normal, or we can find a reasonable reason to refute it. After all, it is not uncommon for startups to choose to spend more money on marketing before IPO.
While Airbnb’s spending increased 47% from the same period last year, its revenue also increased by 31%. Airbnb also said its second quarter of 2019 revenue “significantly” exceeded $1 billion. Earlier this year, Airbnb also told investors that projected revenues for 2019 would be between $4.6 billion and $5 billion, an increase of between 28% and 39%.
Just in the Information view, the dramatic increase in advertising spending may also be one of Airbnb’s concerns, which means Airbnb may have difficulty retaining existing customers. While Airbnb’s direct traffic to Europe and North America is higher than Booking and Expedia in a study by SimilarWeb, advertising spending is still essential in the long run.
If you still want to find a reason for Airbnb, then we have to find some examples to prove that Airbnb is different from WeWork, which has been burning money. The most straightforward evidence is that Airbnb has proven its profitability, which has been profitable (EBITDA) for two consecutive years, and the business model has shown some sustainability.
Amakor Capital, a London-based investment firm, predicted in a report to potential investors in May that Airbnb’s revenue growth this year will reach 41% (more than Airbnb’s own forecast). By 2021, its pre-tax, interest, depreciation and amortization margins will reach 25%.
And CNBC citing reports from insiders also reminds us that Airbnb will not be the next WeWork.
The person familiar with the matter said that Airbnb still has $3 billion in cash flow (about $3.5 billion at the end of March) and that they have never used a billion line of credit.
▲ Image from: Special Patrol Group
In the past few years, IPO companies have been able to have valuations that are several times their value, as long as they are related to technology interconnects. At that time, investors were willing to burn money for growth. They believed that the winners would eat all the time. I believe that these technology Internet companies will one day turn around and make money for investors.
But the day when some companies enjoyed the fruits of victory never came. Now, the market is full of vigilance against all companies that are temporarily losing money, burning money and maintaining growth. They are afraid that this is the next company that won’t win the game.
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▲ Image from: Leon Seibert
A company that had previously cited the name of a technology Internet company was listed on a valuation that did not match its own. Now, companies related to the technology Internet also need to face more cautious eye checks by investors.