Airbnb goes public! Why Airbnb can get such a big market attention? Can it even grab the headlines in the financial circle that "Bitcoin is close to the historical high of 20,000 US dollars"?

First, the U.S. stock market has shown the craziest listing frenzy since 1999 this year. Apart from Bitcoin, many institutional investors still favor the traditional investment form of equity.

Second, Airbnb is the largest IPO this year - it landed on the US stock market at a price of US$68 per share, which means that Airbnb's initial valuation will reach US$47-48 billion.

This valuation level has increased significantly from the US$18 billion after the two debt financings in April, or the US$31 billion F round before the outbreak of the new crown in 2017.

What's more interesting is that before listing on Nasdaq, the cryptocurrency derivatives exchange FTX has already launched Airbnb's Pre-IPO products one step ahead. Users can preemptively buy hype before listing, so as to obtain the right to sell hype at the initial stage of listing.

Airbnb is AirBed and Breakfast ("Air-b-n-b"), the Chinese name is Airbnb.

I believe that everyone knows the development history and business model of the shared short-term rental platform Airbnb, so this article will not focus too much on it here, but will focus on "Is there any investment value for Airbnb after it lands in the US stock market? Is there any speculative opportunity in this process?" Two core questions.

First of all, we need to understand why Airbnb’s IPO price can increase from the initial $40-50 to $60, and then to $68. In short, the IPO mechanism adopted by Airbnb is not the fixed-price auction we generally understand, but similar to the "Dutch Auction". Being squeezed by a single institution, on the other hand, Fomo sentiment is also generated, because the low quotation may not get the shares.

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Unity daily K chart

Therefore, we can draw a preliminary conclusion:

The market demand for Airbnb stock is huge, otherwise the IPO price would not have been raised by such a percentage. But at the same time, IPOs that adopt a mixed pricing mechanism often lead to the stock price being expected to be priced in advance during the IPO stage, so the market may gradually cool down during the cooling-off period after three days of listing.

Second, let's briefly explore where is the long-term investment value of Airbnb? And where might the hitting zone be for long-term investing?

Obviously, the new sharing economy is becoming a singularity of world change. Just like Uber’s subversion of the car rental company Hertz, Airbnb’s model enables the company to operate lightly without holding too many fixed assets. At the same time, the platform creates Word-of-mouth and user stickiness continue to expand, thereby changing more traditional Internet rental platforms such as Booking.com.

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Comparison of available listings on Airbnb and competitors (excerpted from Forbes)

If we go through the IPO prospectus, we will actually find that Airbnb has also suffered a severe blow during the new crown epidemic this year. In the third quarter, its revenue only recovered to 82% of the same period last year. In the first nine months, its revenue was 3.4 billion US dollars. Annual revenue of $4.8 billion.

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ABNB's core business revenue and total revenue since 2018 (from Forbes)

Third, and probably the most concerned one, can Airbnb’s stock be “speculated”?

Recalling the calculation above, if a 30% premium is normal, then Airbnb’s 50%-60% premium in the initial stage of listing is completely predictable, which is converted into a stock price of 102-109 US dollars.

The characteristics of this year's US stock market environment cannot be avoided:

1. This year is a big era for US stock IPOs

2. High-quality sub-new shares are given a generous premium by the secondary market.

Many people consider that Airbnb's IPO valuation is too high, and even raised the price, including the fact that Airbnb's Pre-IPO on FTX also skyrocketed. (Note: As I write this, the stock price is just $70 and has risen to $95 now)

However, in the medium term, Airbnb is bound to disappoint those who want to enter the market with a valuation under $40 billion, which is the most comfortable hitting zone. Why?

Because the price never reflects the value, the price always deviates from the value, either always overestimated or always underestimated.

This is not what I said, it is the core theory of Soros.

Flexibility

What's the meaning?

We can see that after the end of October, a lot of high-quality technology new stocks appeared in the US stock market. After a period of washing up, these new stocks have entered the mighty main rise without exception.

Among these new times, the best case is Berkshire's IPO-Snowflake, which made an exception.

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Snowflake Daily K Chart

Standards with relatively high-quality fundamentals at the far end, such as Uber, Snap, Pinterest... Which one is not a jet plane?

Among the Chinese concept stocks listed this year, ideal, Xiaopeng, Yalla Group (Middle East social networking), Qinhuai Data (infused with ByteDance’s IDC concept), and Education Technology (VC grouping) which are relatively highly recognizable are not hot money in the market Repeated attacks?

Regarding Airbnb, we can confirm three points. First, the company is well-known and the IPO listing event is hot; second, the entire US stock market has high enthusiasm for hype for high-quality new stocks; third, the initial valuation of the fundamentals is neither cheap nor expensive.

Therefore, for a period of time after listing, Airbnb's stock price will always move in the "overvalued" range.

If we determine through fundamental analysis that Airbnb's most comfortable "hitting zone" is below the $40 billion valuation, then we can conclude:

In the near future, we can't wait for the price range of 50 billion US dollars at all.

This year's US stock market is no longer an investment, but a large-scale game of funds and emotions.

It can even expand the U.S. stock market to the global secondary market. Jet planes can be seen everywhere. Bitcoin dreams of returning to 2017. The Japanese stock market is rapidly rising back to the lost thirty years. Iron ore and thermal coal are dreaming of returning to 2007...

Of course, this is not what this article wants to discuss.

What does that mean?

What does that mean?

Investors who have paid attention to the US stock market before should have experience. You should know that the market was very hesitant about the new batch of Snowflake and Unity at the beginning. The market even discussed whether the valuation of Snowflake and Unity will collapse. Questions like whether my investment in Snowflake was a failure.

But for this batch of new stocks, whether it is Airbnb or Doorhash, the market's attitude is one word "grab". The reason is also very simple, because of the hesitation last time and missed, this time it will raise.

Therefore, from my personal point of view, only for short-term speculation, Airbnb's range increase will definitely not be higher than Snowflake.

In addition, there is another key event that we need to pay attention to, that is, Airbnb's stock unlocking rules are relatively loose, which is different from Snowflake's large number of lock-ups to stabilize the selling pressure. Airbnb's employee shareholding is released 15% at the beginning.

Therefore, within three to five days of listing, Airbnb is likely to see a drop in market price due to the exhaustion of speculative buying and the double kill caused by the cash-out of employee stock holdings, thus showing a good short-term entry point.

In summary, we may be able to draw a rough outline of the price movement after Airbnb’s listing:

The price spurted due to the enthusiasm of investors at the beginning of the listing, but Airbnb is not a company with a small market capitalization after all. After a period of time, the price fell back causing negative feedback, and internal holdings began to sell off, causing short-term panic on the market, but the "parking lot effect" And the fundamental valuation anchor makes it difficult to fall below the IPO pricing range, and the market price seeks support. If the momentum factor in the U.S. stock market has not disappeared at that time, then Airbnb, as a high-quality newcomer in the front row, will be tapped by the market again.

It is a little pity for everyone that the price of ABNB on the FTX platform has risen from the initial price of $60 on the platform to around $95, a single-day increase of nearly 60%. Investors who got chips at the bottom of the price already have Infinite first-mover advantage.

But it doesn’t matter, if there is a high-quality IPO in the US stocks next time, you can pay attention to FTX’s Pre-IPO products first, so as not to miss the high-certainty premium trading opportunities like ABNB now.

When the cryptocurrency market is deadlocked and the shock pattern cannot be opened by both sides, it is obviously more meaningful to focus on a bet with both volatility and liquidity. After all, trading is looking for simple and clear things.