ABNB trade ideas
$ABNB is giving a GREAT IPO LONG opportunity todayIPO intraday trading strategy idea
AirBNB is an American vacation rental online marketplace company.
The share price is rising and gonna continue this trend today.
The demand for shares of the company still looks higher than the supply.
These and other conditions can cause a rise in the share price today.
So I opened a long position from $155,00;
stop-loss — $134,00;
take-profit — $218,00.
Do not view this idea as a recommendation for trading or investing. It is published only to introduce my own vision.
Always do your own analysis before making deals. When you use any materials, do not rely on blind trust.
You should remember that isolated deals do not give systematic profit, so trade/invest using a developed strategy.
If you like my content, you can subscribe to the news and receive my fresh ideas.
Airbnb — 30% Yield Potential for the Most Anticipated IPO 2020Airbnb, the world-famous online platform for finding and renting private housing around the world, is launching its IPO on December 9. Since its inception, the platform has catered to over 825M customers.
Airbnb IPO: Key Facts
IPO Date: December 9
IPO Cap: USD 28B
Number of Post-IPO Shares: 596.39M
Shares for IPO: 51.90M
IPO Size: USD 2.44B
Starting Price: USD 44 to USD 50 per share
Target Price: USD 65 per share
Underwriters: Morgan Stanley and Goldman Sachs
Potential Market
The company estimates its potential market at $3.4T, of which $1.80T accounts for short-term stay or rent.
The core competition includes Booking Holdings (Booking.com, KAYAK, Priceline.com, and Agoda.com), Expedia Group (Expedia, Vrbo, HomeAway , Hotels.com, Orbitz, and Travelocity), Trip.com Group (Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner), Meituan Dianping, Fliggy (Alibaba) Despegar, MakeMyTrip, Marriott, Hilton , Accor, Wyndham, and InterContinental, among others.
Financial Figures
In 2018, Airbnb's earnings increased by 43%, in 2019, 32%, while over the nine months of 2020, the earnings went down by 32% due to the pandemic.
The EBIT margin reached -3% in 2017, 1% in 2018, -10% in 2019, and -19% over the nine months of 2020.
The main reason for the rising spending and lower margin is the development cost growth: 16% of earnings in 2018 compared to 20% in 2019 and 27% over the nine months of 2020; the G&A reached 13% in 2018, 15% in 2019, and 17% in January to September 2020.
Forecast
The upside potential may reach 30% of the starting price ($50).
The FCFF model projects a net worth estimate of $39.064B, taking into account the conservative values. The target price is at $65 per share, with a 30% yield potential.
Airbnb — 30% Yield Potential for the Most Anticipated IPO 2020Airbnb, the world-famous online platform for finding and renting private housing around the world, is launching its IPO on December 9. Since its inception, the platform has catered to over 825M customers.
Airbnb IPO: Key Facts
IPO Date: December 9
IPO Cap: USD 28B
Number of Post-IPO Shares: 596.39M
Shares for IPO: 51.90M
IPO Size: USD 2.44B
Starting Price: USD 44 to USD 50 per share
Target Price: USD 65 per share
Underwriters: Morgan Stanley and Goldman Sachs
Potential Market
The company estimates its potential market at $3.4T, of which $1.80T accounts for short-term stay or rent.
The core competition includes Booking Holdings (Booking.com, KAYAK, Priceline.com, and Agoda.com), Expedia Group (Expedia, Vrbo, HomeAway, Hotels.com, Orbitz, and Travelocity), Trip.com Group (Ctrip.com, Trip.com, Qunar, Tongcheng-eLong, and SkyScanner), Meituan Dianping, Fliggy (Alibaba) Despegar, MakeMyTrip, Marriott, Hilton, Accor, Wyndham, and InterContinental, among others.
Financial Figures
In 2018, Airbnb's earnings increased by 43%, in 2019, 32%, while over the nine months of 2020, the earnings went down by 32% due to the pandemic.
The EBIT margin reached -3% in 2017, 1% in 2018, -10% in 2019, and -19% over the nine months of 2020.
The main reason for the rising spending and lower margin is the development cost growth: 16% of earnings in 2018 compared to 20% in 2019 and 27% over the nine months of 2020; the G&A reached 13% in 2018, 15% in 2019, and 17% in January to September 2020.
Forecast
The upside potential may reach 30% of the starting price ($50).
The FCFF model projects a net worth estimate of $39.064B, taking into account the conservative values. The target price is at $65 per share, with a 30% yield potential.
Airbnb (ABNB): Everything You Need to Know for the IPOAirbnb is an online rental marketplace for lodging, home stays, and tourism experiences.
The company does not own any real estate listings, but offers a platform through which people can take part in the sharing economy.
Airbnb announced its filing for an initial public offering (IPO) in August.
In this analysis, we’ll be going over everything investors need to know about the IPO, and my own insight on whether this is a golden opportunity.
Most of the information provided below is based on the S1 Airbnb Submitted to the SEC.
Disclaimer: This is not financial advice. This is meant for educational and entertainment purposes only.
Business Model
- Airbnb connects hosts who are willing to provide room, with guests
- Airbnb profits from charging a service fee to both the host and the guest
- While it initially started off as hosts providing bedrooms, the company has managed to find and expand on different types of lodges.
- Airbnb is well known for its systematic operations; they have a unique guest/host review system, rules regarding cancellations and deposits, and is oriented and focused on building a community.
Counterparts Cases
- Airbnb’s counterparts include companies like Expedia group (EXPE) and Booking Holdings (BKNG)
- It’s important to take into consideration the growing competitiveness within the booking market.
- Unlike Airbnb, both Expedia group and Booking Holdings are reporting solid earnings as their operating profits increase yoy.
- TripAdvisor (TRIP), which reported $156m in revenue for 2019 and an operating profit of $18.7m, while small, is another example of companies competing against Airbnb
- However, to be fair, these companies also all fell victim to the Covid-19 pandemic.
IPO Information
- The company will be listed on the NASDAQ exchange under the ticker ABNB
- The specific date of the IPO and price per share is yet to be officially announced.
Financials
- Due to Covid-19, the company’s revenue and profitability plummeted in 2020.
- Q2 2020 revenue was $350m, which is a 67% compared to Q2 2019, which recorded a quarterly revenue of over a billion.
- These numbers are less than half of the reported revenue for Q1 2020, of $842m
- As a result, the company’s valuation dropped from $31b to $18b.
- The fact that the company is not profitable yet is also quite fatal.
- In 2017 and 2018, there was a lot of hype around the company as they showed positive numbers for their EBITDA (earnings before interests, taxes, depreciation, and amortization)
- But, the company has been reporting inconsistent revenue ever since, and their sales and marketing
- As of September 30 2020, the company has $2.6b in cash, which is more than numbers reported for cash and cash equivalents in 2019 and 2018.
- Nonetheless, this is way below their short term net liabilities of $4.38b, which is considered a warning sign in terms of financial stability.
- Additionally, they have $1.8b in long term debt as well.
- Taking all of this into consideration, we could make an educated guess that Airbnb is trying to seek for funds through this IPO.
- It has already undergone its Series F investments, and is a unicorn company (a private company with a valuation over $1b), which makes it difficult to receive any further meaningful investments.
Covid-19 Impact
- Airbnb is part of the industry that was arguably most heavily affected by the Covid-19 pandemic
- They had a net 4.1m cancellations in March, when fear regarding Covid-19 peaked.
- I’ve mentioned this in a previous analysis, but Covid-19 has fundamentally changed the way we live forever
- As a result, Airbnb’s goal of creating a community of hosts and guests has faced a huge obstacle, as people prefer to stay at hotels, which involve lower risk of Covid-19 infections.
- Thus, whether people would want to travel via Airbnb after the pandemic is solved still remains extremely murky, as clear solutions to the current situation are yet to be proposed.
- Unlike other large tech companies, Airbnb lacks the cash to endure a long phase of hardship.
- Due to the impact of Covid-19, the company has laid off over 1,900 employees to cut costs.
Historical Cases
- We have seen other companies within the sphere of the sharing economy take part in IPOs that have failed miserably
- Companies such as Uber Technologies (UBER) and Lyft (LYFT) are prime examples. (Refer to the charts on the right)
- They were provided multiples way above their actual value, and their stock prices eventually fell way below the IPO price.
- WeWork, once valued at $47b, failed its IPO due to massive debt and shaky corporate structures, and is now valued at $2.9b
- Given past cases of other tech companies within the realm of the sharing economy having undergone failed IPOs due to overvalued multiples, it’s important to consider why Airbnb might be exempt from this case.
Mike’s Insight
In summary, while Airbnb’s listing is arguably the most important IPO of 2020, investors need to consider all possible factors before participating in the IPO. Its growing number of users suggest that the business is on the right track over the long run, but is faced with a serious external risk that the company has no control over. As this risk extends throughout time, the more damaging it is to the fundamentals of the business, thus providing room for investors to reconsider the proper valuation of the company. In my humble opinion, given that the company goes public at a $30b valuation, I think we’d see prices drop sharply after the IPO. Nonetheless, I could consider adding it to my portfolio as we see clearer signs of the world recovering from the coronavirus.
If you like this analysis, please make sure to like the post, and follow for more quality content!
I would also appreciate it if you could leave a comment below with some original insight :)
