AirBnB

[weijian]

I wouldn't consider ABNB an 'ecosystem' in the same ways that Grab or Apple are considered ecosystems, where the user achieves a greater experience by using separate products from the same ecosystem (the local banks does this too by rewarding you when you use their CC, savings account, and wealth management products, etc). 

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I think you are thinking about product ecosystems like Apple. I'm talking about how Airbnb has a buyer-seller ecosystem, like Youtube.

Platforms like YouTube and Airbnb offers sellers of a product (video, short-term rental etc.) access to buyers. The platform/ecosystem gets more valuable to sellers as the number of buyers on the platform increase, and vice-versa. A flywheel effect.

In fact, Airbnb doesn't just have a buyer-seller ecosystem, but also an ecosystem of startups built around it: https://www.bloomberg.com/news/articles/...-t-have-to ; https://www.cnbc.com/2018/05/22/the-airb...world.html

Peace.

Yes, I would use the word "platform" over "ecosystems". That is why I used platform in front of ecosystem in my original message.

A platform is a form of ecosystem and I have to say, one of the strongest type of ecosystem.

[Wildreamz]

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hi Wildreamz,
I wonder what is the kind of quantitative valuation principle you will use?
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You are too polite. I just eyeballed it. 

Airbnb is an inherently asset-light business, with ~75-80% gross margin (and improving), minimal/non-existent competitors (due to strength of business and global network effect), and multi-trillion dollar TAM (global travel industry); in total, 3 co-founders owned about 44% of Airbnb (https://www.sec.gov/Archives/edgar/data/...668ds1.htm) pre-IPO, shows that the business requires very little cash infusion (looking at the S1 they have regularly been profitable on adjusted basis, but really ramped up SG&A temporary pre-IPO to make their growth look better). Airbnb also enjoy aforementioned flywheel effect (as number of consumers using the platform increase, it becomes more valuable to hosts world-wide and vice versa). 

Taking into consideration growth potential (TAM etc.), speed of growth, inherent profitability, lack of competition (durable competitive advantage), stakeholder friendly management, founder-led (with good Glassdoor scores); and many other intangible quality of the Airbnb business (supports small businesses, creator economy, brand equity etc.). 

In 2019, Airbnb's revenue was $4.8bil, in current pandemic-ravaged year, TTM revenue was $5.3bil. I think over the next year or two Airbnb has visibility to make at least $8bil in revenue (for reference, Booking.com revenue peaked at $15bil pre-pandemic; TTM revenue currently stands at $9.2bil). A few months ago Airbnb was trading at $80-90bil (~10-11x forward PS; based on $8bil forward revenue assumption; this is around the same ballpark (market cap, gross margins, revenues etc.) as Facebook was in 2013 at $20-30), I thought it was a reasonable entry price for an asset-light business of this size, with clear visibility on both short-term and long-term growth prospect. ymmv

As business conditions of Airbnb is still highly in flux, will still need to monitor a few more quarters to recalibrate expectations. But past two quarters looked good; in fact, the business is much more resilient that I thought (in some countries, people shifted their travel needs to staycation at an Airbnb) and the TAM might be larger than I thought (people started to use Airbnb as home offices, co-working spaces etc).

Edit: added additional details since I have some time.

[Wildreamz]

Airbnb posted earnings yesterday:


$8.4 billion revenue and $1.9B net income. My predictions >1 year ago didn't fair too badly ($8bil in 1 or 2 years) even though I did not predict the Russian invasion.

Considering new macro headwind, multiples and earnings expectations, probably needs to be adjusted. That said I'm still expecting 20+% topline growth with expanding net income margin moving forward over the next 3-5 years (till at least the size of Booking's revenue at it's peak) before moderating to 10+%.

(vested)