ABNB & DASH IPOs Demonstrate The Risk Appetite For Equities
The markets might be getting frothy with excess and this week's IPO bonanza epitomizes the market's lust for risk. The IPO market is red hot, with Renaissance IPO ETF IPO having more than double in 2020 and more than tripling from its bottom.
Airbnb ABNB became the largest IPO of this unprecedented year yesterday, raising over $3.5 billion. The IPO was priced at $68 per share, valuing the company at $47 billion, but ABNB was met with significantly more enthusiasm when it hit the public exchanges. Its share price opening at $145, more than double the IPO price, and a high of $165 a share.
Airbnb, a business valued at $18 billion in April, is now worth more than $100 billion. This is more than 20x price to 2019 sales, multitudes higher than any comparable business. Booking Holdings BKNG has a broader portfolio of vacation booking options, generates more than 3 times the revenue, produces a profit, and robust growth. Yet, it's being valued at less than ABNB. Airbnb is now more valuable than Marriott MAR, Hilton HLT, and Hyatt H combined.
DoorDash's DASH was a similar story, with an official IPO price of $102. After hitting the public exchanges, the shares shot up 86% to over $180 and a $72 billion valuation. This values DASH at above 32x price to trail 12-month sales, far to zealous for a business in such a highly saturated space.
DoorDash's revenues did surge 226% in the first 9 months of 2020, but this tailwind will come to an end and maybe even reverse once restaurants start opening again as the vaccine is distributed over the next 6 months.
I believe that the future of this business is bright as the online-driven foodservice space explodes. Analysts and investors need to ponder whether DoorDash can maintain its #1 positioning in this highly saturated category. Uber's UBER recently announced acquisition of Postmates will give its food delivery business a firm #1 positioning in some key US markets and provide it with the scale it needs to compete with DoorDash.
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Marriott International, Inc. (MAR) : Free Stock Analysis Report
Hyatt Hotels Corporation (H) : Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
Renaissance IPO ETF (IPO): ETF Research Reports
Booking Holdings Inc. (BKNG) : Free Stock Analysis Report
Uber Technologies, Inc. (UBER) : Free Stock Analysis Report
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