During its IPO, the price of the apartment rental company jumped making Brian Chesky, its co-founder, the 180th fortune in the world in one day.
Brian Chesky didn’t expect this. The CEO and co-founder of Airbnb hoped that his company’s IPO would be a success, but not to the point of making the smashing entry it made. The action which was worth 68 dollars on Thursday when it was floated on the stock market was worth more than 144 at the close. The shares of the peer-to-peer rental company have been snapped up.
The company reached in the session a valuation of 100 billion dollars, more than its rival Booking. And much more than the giants of the hotel industry. The world number 1 Marriott is valued at 43 billion dollars and the French champion Accor is worth more than 10 times less than Airbnb at 8 billion dollars.
And Brian Chesky had something to be doubly satisfied with this Thursday. First, because investors still believe in Airbnb despite this catastrophic past year for tourism. Secondly, because he personally took advantage of this surge in the stock market price. The CEO saw his own stake in Airbnb climb to $ 11.4 billion, Bloomberg notes. In one day, the man who had the idea to create Airbnb in 2008 when he was unemployed and renting his apartment to make ends meet, entered the top 200 of the greatest fortunes of the planet. He is at the same level in the Bloomberg ranking as the French Emmanuel Besnier, boss of Lactalis.
The euphoria of investors reflects above all confidence in the future for the Airbnb model. Because today there is still reason to doubt. First, despite the growth of its activity, Airbnb is burning a lot of cash and has not made a single annual profit since 2015. In 2019, the losses had even amounted to 674 million dollars (for a figure of 4.8 billion business), a record.
Above all, the rental platform has encountered resistance along the way, several municipalities (including the City of Paris) and hoteliers worrying about seeing private housing turn de facto into hotels, depriving individuals of homes, promoting speculation. real estate and creating a shortfall for the traditional hotel sector. But the group now has four million hosts on its counter and more than 825 million customers.
“People are afraid to go to hotels”
Obviously the platform was hit hard by the sanitary measures imposed on the world in the winter and last spring – its turnover for the first nine months of 2020 plunged 32% over one year. The company had to urgently raise $ 2 billion to deal with the crisis and lay off around 25% of its employees.
This allowed him to raise his head during the summer vacation: from July to September, the platform earned $ 219 million. Airbnb has particularly benefited from the appetite for long weekends and vacations nearby, as well as the desire of people to telecommute from a place other than their home.
By buying shares of the site, investors feel they are banking on the rise of a new giant in its sector, notes Gregori Volokhine, portfolio manager for Meeschaert Financial Services.
“People are currently afraid of going to hotels, public places, there is a real appetite for rentals in individual places,” he told AFP. “And the competition, like (the site) Expedia, is way behind.”
Airbnb thus achieved profits of $ 219 million in the third quarter of 2020 thanks to a recent savings plan by the group. The simple fact that Airbnb manages to generate quarterly profits can also be an asset on Wall Street, where many companies in the sharing economy, like Uber, have gone public without ever making a profit.