Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Korea/Asia, Events, IPOs

Equity Capital Markets

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<strong>Our base case valuation of Airbnb suggests an EV of $39.7 billion, an implied market cap of $45.0 billion, and an implied price per share of $64.3 per share, which would represent a 29% upside from the high end of the IPO price range of $44 to $50 per share.</strong> Given the attractive upside, we have a positive view of the Airbnb IPO. Our base case valuation assumes an estimated sales of $4.8 billion in 2021 (up 37.3% YoY). Our sales estimate of $4.8 billion in 2021 is similar to the company's sales in 2019. </div><div style="text-align: start;"></div><div style="text-align: start;">Our base case valuation also assumes an EV/Sales multiple of 8.3x in 2021, which is the same valuation multiple used for Booking Holdings, one of the comps. The $35 billion in market cap figure (top end of the IPO price range of $50 per share) would imply an EV/S multiple of 6.3x in 2021, if we use an estimated sales of $4.8 billion in 2021. The 6.3x EV/S multiple would be 24% below the valuation multiple of Booking Holdings but 22% higher than the average EV/S multiple of Airbnb's comps.</div>


Our base case valuation of Airbnb suggests an EV of $39.7 billion, an implied market cap of $45.0 billion, and an implied price per share of $64.3 per share, which would represent a 29% upside from the high end of the IPO price range of $44 to $50 per share. Given the attractive upside, we have a positive view of the Airbnb IPO. Our base case valuation assumes an estimated sales of $4.8 billion in 2021 (up 37.3% YoY). Our sales estimate of $4.8 billion in 2021 is similar to the company's sales in 2019. Our base case valuation also assumes an EV/Sales multiple of 8.3x in 2021, which is the same valuation multiple used for Booking Holdings, one of the comps. The $35 billion in market cap figure (top end of the IPO price range of $50 per share) would imply an EV/S multiple of 6.3x in 2021, if we use an estimated sales of $4.8 billion in 2021. The 6.3x EV/S multiple would be 24% below the valuation multiple of Booking Holdings but 22% higher than the average EV/S multiple of Airbnb's comps.

Equity Analyst, LightStream Research

Oshadhi Kumarasiri

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>
<a href="https://www.smartkarma.com/entities/airbnb-inc" target="_blank" data-smartkarma-citation="entities:431:1" rel="noopener">Airbnb Inc (9865065Z US)</a> filed an amended S1 with the Securities and Exchange Commission on 1<sup>st</sup> of December 2020 to offer 50.0m new Class A common shares at an offer price range of $44.0-50.0 per share. The IPO will include an additional 1.9m secondary Class A common shares and an overallotment option of another 5.0m shares. At a deal size of $2.5-2.84 billion (including the over-allotment option), Airbnb IPO could be one of the largest IPOs on the NYSE this year.</li>
<li>Most of the loss-making tech start-ups in the recent past have failed to provide a business model capable of being profitable in the near future. Armed with money from private market funding at almost ridiculous valuations, these start-ups go on to spend big money on customer acquisition (chasing revenue growth) without giving proper attention to the ROI of customer acquisition and marketing spend.</li>
<li>Airbnb’s philosophy is different from those tech start-ups and it is the main reason why we like the company so much. We discuss the details below.</li>
</ul>



Airbnb Inc (9865065Z US) filed an amended S1 with the Securities and Exchange Commission on 1st of December 2020 to offer 50.0m new Class A common shares at an offer price range of $44.0-50.0 per share. The IPO will include an additional 1.9m secondary Class A common shares and an overallotment option of another 5.0m shares. At a deal size of $2.5-2.84 billion (including the over-allotment option), Airbnb IPO could be one of the largest IPOs on the NYSE this year.
Most of the loss-making tech start-ups in the recent past have failed to provide a business model capable of being profitable in the near future. Armed with money from private market funding at almost ridiculous valuations, these start-ups go on to spend big money on customer acquisition (chasing revenue growth) without giving proper attention to the ROI of customer acquisition and marketing spend.
Airbnb’s philosophy is different from those tech start-ups and it is the main reason why we like the company so much. We discuss the details below.


<p>Airbnb is getting ready to complete its IPO in the next several weeks. Airbnb filed for an initial public offering on Monday, <a href="https://www.sec.gov/Archives/edgar/data/1559720/000119312520294801/d81668ds1.htm#toc81668_1" target="_blank" rel="noopener">released its prospectus</a>, and indicated it will trade on the Nasdaq exchange under the ticker symbol ABNB.</p><p>Airbnb's private market valuations declined from as high as $31 billion in 2017 to as low as $18 billion this year due to the COVID-19 pandemic. In April 2020, the company raised $2 billion in debt and equity financing, valuing the company at $18 billion. It probably makes more sense for Airbnb to ride out the COVID-19 and wait for another one or two years to complete its IPO which could result in higher valuations for the company. However, there have been some high pressure for the company to go public, especially from key employees whose <a href="https://www.businessinsider.com/airbnb-files-s1-public-ipo-paperwork-revenue-losses-covid-19-2020-11?r=US&amp;IR=T" target="_blank" rel="noopener">stock options</a> set to start to expire soon. </p><p>Morgan Stanley and Goldman Sachs are the lead bankers in this IPO. Airbnb put the IPO placeholder at $1 billion but there is a good chance that this figure is revised up considerably to nearly $3 billion. The Airbnb IPO is likely to be one of the largest IPOs globally this year.</p>

Airbnb is getting ready to complete its IPO in the next several weeks. Airbnb filed for an initial public offering on Monday, released its prospectus, and indicated it will trade on the Nasdaq exchange under the ticker symbol ABNB.Airbnb's private market valuations declined from as high as $31 billion in 2017 to as low as $18 billion this year due to the COVID-19 pandemic. In April 2020, the company raised $2 billion in debt and equity financing, valuing the company at $18 billion. It probably makes more sense for Airbnb to ride out the COVID-19 and wait for another one or two years to complete its IPO which could result in higher valuations for the company. However, there have been some high pressure for the company to go public, especially from key employees whose stock options set to start to expire soon. Morgan Stanley and Goldman Sachs are the lead bankers in this IPO. Airbnb put the IPO placeholder at $1 billion but there is a good chance that this figure is revised up considerably to nearly $3 billion. The Airbnb IPO is likely to be one of the largest IPOs globally this year.

Airbnb IPO Preview - "It Is All About Trust"

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

<p>Airbnb has confidentially filed for an IPO pointing to a likely raising of capital in contrast to earlier plans for a direct listing. This is probably not a surprise given the hit the company initially took when COVID occurred and the $2bn the company raised in April at an $18bn valuation and the 25% staff cuts it also announced. Despite these measures early signs point to a genuine business here and we feel this will be one of the more exciting IPOs of the year as long as pricing does not become egregious.</p>

Airbnb has confidentially filed for an IPO pointing to a likely raising of capital in contrast to earlier plans for a direct listing. This is probably not a surprise given the hit the company initially took when COVID occurred and the $2bn the company raised in April at an $18bn valuation and the 25% staff cuts it also announced. Despite these measures early signs point to a genuine business here and we feel this will be one of the more exciting IPOs of the year as long as pricing does not become egregious.

Airbnb Pre-IPO – Travelling Down an Actual Path to Profitability

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<p>Following some solid clients' interests in our previous report <a href="https://www.smartkarma.com/insights/2020-major-ipos-pipeline-in-korea" target="_blank" data-smartkarma-citation="insights:35168" rel="noopener">2020 Major IPOs Pipeline in Korea</a>, we have decided to write another report but this time, it will focus on the most anticipated IPOs on a world-wide basis in 2020.  <strong>We have expanded the number of companies in this list and have included the top 100 list of potential global IPOs in 2020. </strong></p>
<p><strong>Among the 100 potential IPOs, they are from more than 12 countries, including the US, India, China, UK, Thailand, and Malaysia. </strong>Most of the major tech IPOs such as Stripe, Airbnb, and Palantir are based in the US. In addition, there are many excellent IPOs in India coming off a solid year of IPOs in 2019.  There are also numerous interesting IPOs in the UK, as these UK based companies try to complete their IPOs after the long delay in the Brexit. </p>
<p>This report is meant to serve as a <strong>comprehensive, reference guide</strong> to help clients so that they could get a broad view of the major IPOs that could get completed next year on a world-wide basis. </p>
</div>


Following some solid clients' interests in our previous report 2020 Major IPOs Pipeline in Korea, we have decided to write another report but this time, it will focus on the most anticipated IPOs on a world-wide basis in 2020.  We have expanded the number of companies in this list and have included the top 100 list of potential global IPOs in 2020. 
Among the 100 potential IPOs, they are from more than 12 countries, including the US, India, China, UK, Thailand, and Malaysia. Most of the major tech IPOs such as Stripe, Airbnb, and Palantir are based in the US. In addition, there are many excellent IPOs in India coming off a solid year of IPOs in 2019.  There are also numerous interesting IPOs in the UK, as these UK based companies try to complete their IPOs after the long delay in the Brexit. 
This report is meant to serve as a comprehensive, reference guide to help clients so that they could get a broad view of the major IPOs that could get completed next year on a world-wide basis. 


2020 IPOs Pipeline Worldwide (Top 100 Companies)

United States

Airbnb, Inc. operates an online marketplace for travel information and booking services. The Company offers lodging, home-stay, and tourism services via websites and mobile applications. Airbnb serves clients worldwide.

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Airbnb (ABNB US)

Airbnb IPO Valuation Analysis

Our base case valuation of Airbnb suggests an implied market cap of $45.0 billion ($64.3 per share), which would represent a 29% upside from the...

Douglas Kim

What Sets Airbnb Apart from Others?

Airbnb filed an amended S1 with the Securities and Exchange Commission on 1st of December 2020 to offer 50.0m new Class A common shares at an offer...

Oshadhi Kumarasiri

Airbnb IPO Preview - "It Is All About Trust"

The combination of an excellent technological platform combined with millions of reviews has resulted in a powerful network effect for Airbnb.

Douglas Kim

Airbnb Pre-IPO – Travelling Down an Actual Path to Profitability

Airbnb has confidentially filed for an IPO pointing to a likely raising of capital in contrast to earlier plans for a direct listing. This is...

Mio Kato

2020 IPOs Pipeline Worldwide (Top 100 Companies)

Following some solid clients' interests in our previous report 2020 Major IPOs Pipeline in Korea, we have decided to write another report but this...

Douglas Kim

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