Airbnb IPO Valuation by Aswath Damodaran Dec 2020
Airbnb has brought the sharing economy to housing, connecting home owners (hosts) who own units or houses that they want to rent with renters (guests) online, collecting a percentage of the transaction revenues from both sides of the transaction. Its low capital intensity model and extended reach has allowed it to expand not only to expand to almost every part of the world (220 countries) but also provide an unmatched range of offerings.
The growth in gross bookings has started to slow down, as the company gets bigger, and the COVID shut downs made 2020 a regressive year. That said, as its competitors in the hotel business have been damaged far more by the crisis, Airbnb will be able to recover quickly from the crisis, and continue on its growth path. Economies of scale will allow for only mild improvements in revenues as a % of gross billings, but the brokerage-based business will generate high margins, in steady state, and require relatively little reinvestment.
Source tweet with all the numbers used in the analysis: https://mobile.twitter.com/AswathDamodaran/status/1334356017820311556
Submitted December 07, 2020 at 07:19AM by aegeanrain https://ift.tt/2VJSD38
