Founded in 2008, Airbnb (ABNB) — which began as a platform to rent airbeds and rooms in shared spaces — is the largest and most popular short-term and vacation rental platform in the world, recalls Todd Shaver, growth stock expert and editor of BullMarket.
Over the course of the company’s history, over half a billion guests have stayed in an Airbnb home, earning hosts $65 billion. They are active in over 81,000 cities in 200 countries. The acceleration of that growth before and after the company went public has continued apace and become much stronger.
The company paused its plans for an IPO earlier 2020 but later went public on December 9th, 2020. It was one of the most anticipated IPOs of the year because it had remained a private company for 13 years. The stock opened at $146 on its first day of trading, more than doubling the $68 price set by the investment bankers.
With the rise in popularity of local travel due to COVID-19, Airbnb has done well over a period that has been brutal for the travel and tourism industry. We expect them to continue to do well as people continue to book local travel and subsequent international travel when restrictions ease up.
The current trend of travelers looking from isolation has also benefited Airbnb more than its competitors. Customers are often looking for a cabin or cottage away from dense urban centers.
Airbnb had a strong showing of 193 million bookings in 2020, leading to $3.4 billion in revenue, down from a peak of $4.7 billion in 2019, pre-pandemic. 2014 saw revenues of $400 million, giving Airbnb a hockey-stick trendline difference of $3 billion in just six years.
The company has continued to build a strong balance sheet with $6.4 billion in cash, and debt of $2.3 billion. The company reported a net loss of $1.8 billion in 2020 in its first earnings report as a public company.
With its $3.4 billion in revenue, the loss was largely driven by $2.8 billion worth of stock compensation expenses it incurred in its IPO in December. With those one-time payments out of the way, Airbnb can get back to focusing on profitable growth.
Airbnb generated $860 million in revenue in 4Q20, down 22% year over year. Still, things could have been far worse. With a market cap of $110 billion, it has eclipsed the combined valuation of Marriott, Hilton Hotels and Hyatt Hotels.
Profitability was flat in 2017 and 2018, with 2019 showing a loss of $400 million before taxes. 2020 was rough as they took an extraordinary charge due to the IPO in the last quarter of the year.
The true story of this company will emerge in 2021. It’s gotten off to a good start and we believe the story and the financials will only get better from here on out.
The stock has taken off since the IPO, and shares still trade at way more than double the IPO price of $68 a share. Any worry about missing the rally is tempered by the strong growth over the last 10 years and the survival of the business model during the pandemic.
The internet has disrupted many a business since it got rolling in the 1990s. Just 20-25 years later, you have a company that has taken on the hotel chains and revolutionized the marketplace. There are many people in the world now that will never stay at a hotel as long as they live.
The company is one of those major disruptors. With very little competition and a huge head start in the business (having almost invented it), we can see strong growth ahead.