An early look at Airbnb's market opportunity, competitive position, ? stewardship, and valuation ahead of its impending IPO.
Airbnb's Network Effect Offers Investors a Unique Stay
An early look at Airbnb's market opportunity, competitive position,
stewardship, and valuation ahead of its impending IPO.
Airbnb's Rare Network Advantage in a Rapidly Growing Industry Worth a Premium Valuation
Ahead of its anticipated IPO in 2019-20, we see Airbnb's current market capitalization ranging between
$53 billion ($180 per share) and $65 billion ($221 per share), based on a peer-based and DCF-derived exit
multiple approach, 70%-110% higher than the $31 billion the company fetched at its most recent
funding round in July 2017 and above the valuation of any hotel operator. Our valuation implies an
enterprise value to 2019 EBITDA multiple range of 28-32 times (with an assumption of $3 billion in net
cash), a premium to the 18 times awarded on average to other companies with online marketplaces. We
believe a premium is warranted based on several attractive features Airbnb offers investors, including (1)
a powerful and rare network advantage that should drive continued share gains in a rapidly growing
alternative accommodations market; (2) an opportunity to expand its network and addressable market
with vertical extension into hotel, experiences, corporate, and transportation; and (3) strong profitability
prospects driven by the company's high consumer awareness that allow it to leverage top-line growth.
We believe Airbnb's IPO should be on the radar screens for investors seeking exposure to a company
positioned to gain share in the nearly $700 billion global online travel market that we estimate will grow
9.4% annually on average over the next five years.
We expect Airbnb's core alternative accommodations market to experience 16.6% online industry growth
annually on average the next five years, above the 9.4% lift we expect for total online travel.
Airbnb's platform of 250 million monthly visitors and 5 million lis