ABNB - AirBnB

[Xerxes]

Popped up 140%, valued now north of $100 billion.

Up from $18 billion in March. 

[fareastwarriors]

Popped up 140%, valued now north of $100 billion.

Up from $18 billion in March.

 

 

I put order at $125 but no luck! Too much money everywhere.

[kab60]

I love the business. Both as a host and as a traveller. It was the only IPO I actually looked forward to and thought I might give a shot, but that was when pricing seemed more likely in the 20b range. LOL. So much for hoping there'd be a covid-discount. More like a massive premium. Marketcap larger than Booking Holdings. Airbnb did less in revenue than Booking did in ebitda last year.

[rkbabang]

I put an order in at $85, I don't know what I was thinking.  I didn't have a chance.

 

[fareastwarriors]

I put an order in at $85, I don't know what I was thinking.  I didn't have a chance.

 

You were still thinking like a rational investor...  ;D

[Spekulatius]

I have heard this record before: 1999 remastered.

[BG2008]

The crazy thing is that the stuff that I own seems to be reasonably price. Berry at 7.9x EBITDA and 7.7x levered FCF in a ZIRP world.  13% FCF yield where the 10 year US treasury yields 90bps. 

[thowed]

The crazy thing is that the stuff that I own seems to be reasonably price. Berry at 7.9x EBITDA and 7.7x levered FCF in a ZIRP world.  13% FCF yield where the 10 year US treasury yields 90bps.

 

I wasn't really paying attention back in 1999, but from memory some cheap stuff (e.g. Utilities) did pretty well when the tech bubble burst - they were cheap because they were unfashionable.

 

I'm hoping that this will happen again, rather than everything diving.

[Spekulatius]

The crazy thing is that the stuff that I own seems to be reasonably price. Berry at 7.9x EBITDA and 7.7x levered FCF in a ZIRP world.  13% FCF yield where the 10 year US treasury yields 90bps.

 

I wasn't really paying attention back in 1999, but from memory some cheap stuff (e.g. Utilities) did pretty well when the tech bubble burst - they were cheap because they were unfashionable.

 

I'm hoping that this will happen again, rather than everything diving.

 

Yes, there were a lot of really cheap stocks like Reits, utilities and industrials, insurance back then. You could see how the money got sucked out of boring sectors into hot growth, internet, optical network stocks and of course IPO’s. This happens now too, but not tot the same extend than in 1999.

One should also keep in mind that the index (SP500) got quite tech heavy with stocks like MSFT, CSCO, YHOO so index investors got hammered quite badly too and of course the QQQ did even worse.

[bennycx]

Is there a way to get into these shares at near ipo prices without subscribing to the ipo shares?

[Spekulatius]

Is there a way to get into these shares at near ipo prices without subscribing to the ipo shares?

 

The only way I know is to buy them before the IPO using a facilitator for private market shares.

[Xerxes]

Went back to have a look at another juggernaut when it was an infant.

Facebook when it went public had about $5 in revenue and $1 billion in earning. Not sure about the last figure. Let’s say approximately.

 

The IPO popped at $100 billion value nearly popping +100%, nearly 20 times sales. Mostly driven by retail who wanted to catch the next Google.

 

7 years later and 650% return later.

Were they wrong ?

 

Now retail being retail they may have sold out after tripling and doing something else after.

But were they wrong on the thesis.

[rkbabang]

Went back to have a look at another juggernaut when it was an infant.

Facebook when it went public had about $5 in revenue and $1 billion in earning. Not sure about the last figure. Let’s say approximately.

 

The IPO popped at $100 billion value nearly popping +100%, nearly 20 times sales. Mostly driven by retail who wanted to catch the next Google.

 

7 years later and 650% return later.

Were they wrong ?

 

Now retail being retail they may have sold out after tripling and doing something else after.

But were they wrong on the thesis.

 

Is airbnb Facebook though?  Also IIRC Facebook went on to trade below were it traded on its first day. So those who bought on the first day of trading could have bought even lower had they waited.

[rkbabang]

Already lower than yesterday.  Maybe my $85 order won't ever fill, but I think when all the excitement settles down a bit there will be an opportunity to get in at a more reasonable price.

[widenthemoat]

Went back to have a look at another juggernaut when it was an infant.

Facebook when it went public had about $5 in revenue and $1 billion in earning. Not sure about the last figure. Let’s say approximately.

 

The IPO popped at $100 billion value nearly popping +100%, nearly 20 times sales. Mostly driven by retail who wanted to catch the next Google.

 

7 years later and 650% return later.

Were they wrong ?

 

Now retail being retail they may have sold out after tripling and doing something else after.

But were they wrong on the thesis.

 

My issue with this is the retail investors had zero margin of safety when they bought at 100 earnings. Yes, they were right, but had they been wrong they would have lost a significant amount of money. It's easy to say they were right in hindsight, but for every Facebook there are many many losers. I don't think one can buy at 100x earnings consistently over the long haul without having some huge losses. The goal, in my opinion, is to find deals that you don't need to be "right" on. You want a deal where even if things don't go right, you still don't lose much money. The only way I know how to do that is to buy at a significant discount to value so that you have ample room for errors in your judgement.

 

Facebook was a winning business model, obviously, but I don't think picking the next Facebook consistently is possible over the long haul. It will eventually result in massive losses, and anything multiplied by zero equals zero. It reminds me of when everyone sees huge payouts at the casino. Yes, you can win big. But it's all about luck, and the longer you stay in the casino the more likely you are to be a loser.

[Spekulatius]

Went back to have a look at another juggernaut when it was an infant.

Facebook when it went public had about $5 in revenue and $1 billion in earning. Not sure about the last figure. Let’s say approximately.

 

The IPO popped at $100 billion value nearly popping +100%, nearly 20 times sales. Mostly driven by retail who wanted to catch the next Google.

 

7 years later and 650% return later.

Were they wrong ?

 

Now retail being retail they may have sold out after tripling and doing something else after.

But were they wrong on the thesis.

 

Is airbnb Facebook though?  Also IIRC Facebook went on to trade below were it traded on its first day. So those who bought on the first day of trading could have bought even lower had they waited.

 

Facebook greatly increased their TAM when they managed to dominate mobile in addition to their original stronghold in desktop. The acquisitions of Instagram and the heavily criticized acquisition of Whatsup also were masterstrokes. This ended up being a success because Zuck is a very strong operator.

 

I am not sure ABNB is in the same position increasing their TAM but at this point, you are paying for this already.

[Xerxes]

But the initial Facebook shareholders, who believed long term, who bought at IPO weren’t counting on Instagram or else. That was the reward of FB optionality because it was the first.

 

Initial Google shareholders at 2004, weren’t counting on DoubleClick or YouTube acquisitions.

Amazon initial shareholders weren’t counting on Cloud computing being created in the belly of the beast.

 

Point is that it has AirBnb as a first mover with a critical mass as optionalities we may not know yet.

Did I try to buy it on the IPO, I didn’t even bother.

But hoping for a shot at in later on.