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Airbnb soars in public debut

IPOX Founder Dr. Josef Schuster joins Yahoo Finance's Kristin Myers to discuss Airbnb's public debut.

Video Transcript

KRISTIN MYERS: Airbnb has started trading at an open of $146. It is popping right now, up over 134%. I want to turn now to Dr. Josef Schuster, founder of IPOX, to continue some of the conversation that we had started a little bit earlier in the day. Dr. Schuster, so I want to ask you now about Airbnb's path to profitability.

You had said about DoorDash that it was challenging for it to maintain its growth rate and gain profitability. I'm wondering what you think about Airbnb's path to profitability, profitability, if I can talk today. Because the IPO market, last year was full of companies that weren't profitable and had questionable profitability paths. Do you see that as the case here?

JOSEF SCHUSTER: I think the market here, with a strong debut, is really betting on a big jump in demand for Airbnb services once the COVID situation is going to resolve in 2Q, 3Q next year. So this is what the market is betting on here with a strong debut. More broader, was just talking the team here, it's also a strong debuts is attributed to Tesla effect, as well. Tesla is going to be included in the S&P 500 I think eight years after it went public next Friday at a huge valuation, I think indexes missed Tesla for years and years and years to be included.

And I think the market just takes Airbnb price right now is the perceived inclusion in the main indexes, not going to be included in the NASDAQ composite right away, but it will be. And for sure, it will need to get included in the S&P 500 way earlier than probably eight years after it went public, because it shows some profitability. And it's also I think, a strong point for Airbnb whereas DoorDash is. But Airbnb has a lot of strong private equity backing, like loans and such.

KRISTIN MYERS: There's a lot of tailwinds out there for Airbnb, especially in 2021 with the pandemic ending and folks being able to get a vaccine. How sustainable do you see their long-term growth, especially after what is probably going to be explosive growth next year?

JOSEF SCHUSTER: Yeah, obviously that's going to be, the proof of the pudding will be in the eating. And we'll see about, obviously this next year and beyond, it may just be surprise. You know, nobody knows at this juncture. And nobody knows how the vaccine rollout will happen. One interesting aspect is obviously, these companies which trade in the after market, like Airbnb and DoorDash and so forth, they're creating a universe of companies, which is really an IPO M&A target, and companies which can be targets for other companies to be taken over.

We saw this with Slack recently. And Airbnb is just in this pocket of companies too, just like DoorDash. Because there's definitely always, whether we like it or not, there's always going to be a need for these companies. But underneath of that technology is very scalable and there is a global reaction.

KRISTIN MYERS: What about regulation headwinds? This is something that we've talked about in terms of other companies. But a lot of states and cities have placed a target on Airbnb's back, so to speak. Wondering how much you see those regulatory risks.

JOSEF SCHUSTER: All of the issues and all these regulatory risks-- this has been kind of an overhang for a while so far. And they will only get bigger down the road, as people take privacy issues much more serious, and states and governments, and there is always a risk overhang, which is highlighted obviously in the prospectus and so forth. So it's obviously for every positive aspect of the stock, there are risk factors. And this is definitely one serious one, to be taken seriously, yeah.

KRISTIN MYERS: All right, we are going to leave that there. Dr. Josef Schuster, founder of IPOX, thank you so much for giving us some of those insights on it today, as Airbnb starts trading, up over 134% right now. Thanks for joining us.

JOSEF SCHUSTER: Thank you.