      aswathdamodaran.blogspot.com · 2020-12-02
      · 2010d
    

Musings on Markets: The IPO of Airbnb

A comprehensive valuation analysis of Airbnb ahead of its November 2020 IPO filing, examining the company's business model, financial trajectory through COVID-19, competitive positioning against hotels and travel booking platforms, and deriving an equity value of approximately $36 billion ($54/share). The author employs DCF valuation with scenario analysis to assess value drivers (gross booking growth and target operating margins) and provides investor decision rules based on valuation deciles.

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Metrics in this report

Direct Operating Costs as Percent of Revenue

40-42percent

Airbnb historical through recent years; no evidence of economies of scale

Global Hotel Business Revenues

600billion USD

2019 market size baseline for TAM comparison

Gross Bookings Growth Rate

29.25percent

Airbnb 2019; assumes 25% CAGR 2022-2025, declining thereafter

Operating Margin

35.48percent

Booking.com 2019; Airbnb target is 25% by 2031

Revenue as Percent of Gross Bookings

12-13percent

Airbnb historical; new professional host model at 14%, experiences business at 20% take rate

Sales to Invested Capital

1.82ratio

Airbnb 2020; Booking.com 2019 at 1.91; target 2.00 for next decade

VC Valuation at IPO Filing

26-31billion USD

Airbnb's pricing ranged from $26B (April 2020 COVID) to $31B (2016)