Airbnb launched its IPO with much fanfare in mid-December 2020. Its share price opened at US$146 on the Nasdaq more than twice the IPO price of US$68 and hit a high of US$165 before closing at US$144. This pushes Airbnb’s valuation to above US$100 billion.
The market demand and interest in Airbnb’s shares is clearly high, yet if we were to look at the fundamentals, is Airbnb worth a valuation of above US$100 billion? In order to answer this question, we are going to be looking at three questions, (the short answer is also provided for your convenience)
- Is Airbnb profitable today? (Nope)
- Will Airbnb be profitable going into the future? (Maybe)
- How can we position ourselves to profit from Airbnb’s growth? (By buying at the right time)
Is Airbnb profitable today?
Profit is made up of two key components, Revenue and Costs. In order to understand Airbnb’s profit position, it is best to first understand Airbnb’s revenue position.