Should I buy Airbnb Stock?

Airbnb Stock 2019

Should I buy Airbnb Shares 2019? How can I buy Airbnb stock?

Now valued at over $30 billion USD, investors are eager to get their hands on Airbnb stock. But how can (and how should) one go about this? Here we overview when an Airbnb IPO can be expected, and how to get a jump-start on the stock-buying process….before an IPO announcement hits.

This Airbnb stock overview will cover the following:

  • Who can buy Airbnb stock right now?
  • If so, how do I buy shares of Airbnb?
  • And, should I buy Airbnb stock?

Company Overview of Airbnb, Inc. 

Airbnb, Inc. operates an online community marketplace for people to list, discover, and book accommodations worldwide online or from a mobile phone. The company allows people to rent out their extra space and has been a prominent startup in the “sharing economy.” The company was founded in 2008 in San Francisco, California by Brian Chesky, Nathan Blecharczyk, Joe Gebbia, and Molly Turner.

Airbnb has been incredibly successful in its mission to provide that “Belong anywhere” feeling to its users. The company has served over 150 million guests through 2 million listings (*in nearly every country worldwide, circa 2017). Airbnb’s latest funding round surpassed most analyst expectations—closing more than a $1 billion USD round of funding (confirmed by an SEC filling in early March 2017), to bring the company’s total funding yield to more than $4 billion USD.

Airbnb is now worth approximately $31 billion USD—reigning supreme as a true tech ‘unicorn’.

The company also turned profitable in the second quarter of 2016, growing revenue by over 80% in 2016, and plans on maintaining this profitability through 2017. Details have not yet been disclosed, but Airbnb plans to use its new funds to grow operations globally (i.e., outside the US domestic market) as a core focus.

Now, many observers are asking an inevitable – and increasingly pertinent – question: How and where can I get in on the action?

Who can buy Airbnb stock right now? 

Unfortunately, Airbnb is not yet a public company – and it may stay that way until at least 2018.  Thus, currently, there is simply no way to directly buy shares of the company.

CEO Brian Cheskey stated in a 2014 interview that Airbnb was in no rush to go public, indicating that his company would wait until it had a “compelling reason to do so.”

Because of its enormous value, second in value only to Uber based on current evaluations, it has been capable of raising large amount of private money when need be.

Why is that important? 

Airbnb’s ability to raise large amounts of funds from a variety of private sources means that its in no pressure to raise public funds in an IPO. While going public is often a crowning achievement in the entrepreneurship game, this has actually been less the case with startups in recent years. Companies are actually staying private longer than ever before.

Other considerations

The Jumpstart our Business Startup Act (aka JOBS – passed in 2012), effectively raised the maximum number of shareholders a company can have, before disclosing financial statements. Combined with a growing supply of private investors and funding sources, companies (like Airbnb, or Uber) are now able to stay private for longer than they’ve ever been able to before.

But…

There is some hope for investors ready to pounce on Airbnb’s IPO. Recent comments in March 2017 by Chesky hinted towards a current preparation process for an upcoming IPO, stating, “We are working on making sure the company is ready to go public, and I’ve said it was a two-year project… We’re probably about halfway through that project.”

According to Chesky’s articulated timeline, that would put an Airbnb stock offering at roughly: March 2018.

So…. How can I buy shares of Airbnb in 2019? 

As noted previously, you cannot yet buy shares of Airbnb (or Airbnb stock). It’s impossible—nobody is currently able to buy Airbnb stock.

If – and when – Airbnb does go public, it is a relatively straightforward process to purchase Airbnb shares. One would simply need to follow a few steps:

  1. Sign up with an online broker account
  2. Choose your favorite online-broker option. Some popular sites include etrade.com, or TradeKing.com
  3. If you are American, input your SSN to activate your account
  4. And, voila! Start trading.

But… Can I get started right now? 

In some ways, yes! It’s possible to invest in Airbnb indirectly.

One method of indirect investment is to purchase shares of publicly-traded companies which already hold significant private shares of Airbnb. When (and if) Airbnb does finally go public, a large part of those companies’ balance sheets will inevitably be affected (hopefully, positively affected) by an Airbnb IPO.

These early private investors include:

  • Sequoia Capital – invested $600,000 USD
  • Greylock Partners – invested $7.2 mill USD
  • Andreessen Horowitz – invested $112 mill USD
  • Founders Fund – invested $200 mill USD
  • FirstMark Capital – invested $200 mill USD

You can find the complete list on the Crunchbase listing.

While investing in these companies is sure to pay off once Airbnb does go public, it is important to remember that a wide variety of factors can also influence their future profitability and returns on their stocks. So, examine them closely before buying in.

Ok… but should I buy Airbnb stock? 

The most important question any investor should ask at this point is, indeed, should (rather than ‘how’ or ‘can’) I buy a particular stock. It can be confusing—experts definitely differ in their opinion and analysis on the subject of Airbnb’s fundamental value.

Identify the main risk factors

When evaluating potential stock value, a good starting point is always outline potential risk factors.

Firstly, it is important to note that regulators are increasingly seeing Airbnb as a way for private owners to become business renters (without being licensed to do so). Renters also don’t always pay the appropriate taxes on earnings. Some cities, such as San Francisco and New York, are actively finding ways to either limit (or prohibit) the use of ‘peer-to-peer’ home rental business models. This emerging dynamic (and tightening governmental regulation) could prove to be a rather sticky situation for Airbnb, with potential long-term impacts on its future earnings and core business model.

Secondly, new competition from companies such as Roomorama, as well as similar services like VRBO (or even well-established online travel outfits, such as Expedia or TripAdvisor) could ultimately prove challenging to Airbnb. These companies have already attained tremendous scale, and could easily branch out into more flexible business models that directly challenge Airbnb.

Look at projected revenue

Airbnb’s management has predicted $10 billion in annual revenue by 2020 (which, for comparison, is about 60% of Marriott’s 2016 total revenue) – even though Airbnb is a much younger company than many established travel and vacation corporations.

Although it faces some regulatory hurdles (due to its fundamentally disruptive business model), when Airbnb does go public, many experts agree it will be one of the hottest tech debuts of the year. And because its current valuation and projected revenue is so large, it is unlikely to be acquired, which also points to a successful IPO in the next year or two.

Airbnb Stock: Conclusion

A couple things are certain about Airbnb’s immediate future:

  • It is very likely to remain a profitable company in 2019
  • It is currently working on expanding its operations globally, and has shown healthy user uptake
  • It is reportedly half-way through the IPO preparation process, meaning that Airbnb is likely to go public within one year’s time
  • When Airbnb does in fact go public, it is certain to become one of the largest public offering of the year—if not THE largest offering

Investors that have their eye on Airbnb can act now (by investing in stocks related to Airbnb’s main funders – see list above), but they can also rest assured that their time to ‘grab a piece of the Airbnb pie’ might be just around the corner!

Interested in learning about Uber Inc’s stock offering? Check out our article on the subject here.


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