Airbnb has announced their latest IPO pricing range of $44 to $50 per share, which values the company at $35 billion dollars.
I streamed myself building a quick Airbnb discounted cash flow (DCF) model on YouTube a couple weeks ago, and a $35 billion valuation represents a valuation of 9.0x 2021 Gross Profit, assuming they recover to 2019 levels by 2021.
This is a slight premium to Booking Holdings ($BKNG), which owns Booking.com, Priceline.com, Kayak, OpenTable, and others, and trades at 8.2x forward Gross Profit. So the pricing seems “fair” in the context of selling the stock to Wall Street.
But I believe that Airbnb has much higher sustainable growth than Booking because they will continue to not only take market share from traditional lodging inventory, but also expand volume for “Airbnb travel.” They also have additional growth avenues such as with Airbnb Experiences and even long-term rentals.
Yes, Airbnb will continue to run into local zoning issues but I don’t believe that it’s materially more challenging than other disruptive “sharing marketplace” issues like those that Uber or Lyft have faced.
I believe that Airbnb stock at $44-50 is a BUY with potentially over 50% upside. I will post my target price and updated valuation model for ROIC members to download at acouplecents.com and will do a shorter YouTube video on Airbnb.