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Evaluating Airbnb’s future

Yahoo Finance’s Julie Hyman, Brian Sozzi, and Myles Udland discuss the market action for Airbnb.

Video Transcript

JULIE HYMAN: Let's also talk about some analyst coverage for Airbnb. Brian Sozzi, you've been sifting through the notes. It seems like a lot of folks concerned about the valuation.

BRIAN SOZZI: Julie, reading some of these initiation notes on Airbnb, you'd think Airbnb has recreated the wheel, the iPhone, and sliced bread, all in one. I look at Jefferies. They are saying Airbnb is a core investment growth in tech portfolios. You look at Susquehanna, saying Airbnb is a premium asset that deserves premium valuation. A lot of these analysts have come out this morning extremely bullish on this company and what they might look like post-pandemic.

But I do applaud the folks at Morgan Stanley for injecting a little bit of skepticism here, saying the revenue multiple on Airbnb is full. So what is that multiple? 21 times trailing sales, according to Yahoo Finance Premium data on Airbnb right now. By comparison, Booking Holdings, about 10 times, Expedia, about 2.7 times. Overall, a lot of optimism on this company.

Another good data point to note here-- Airbnb's market cap, about $88 billion, almost on par when it debuted when it rose 112% back in December. That is almost Hilton, Marriott, and Expedia, their total market cap about $92 billion.

When you look at what some analysts are saying, sure, they applaud Airbnb, a lot of potential growth opportunity after the pandemic. But that's a tough thing to buy into, guys, that you have Airbnb worth more than Hilton, more than Marriott, and more than Expedia combined. That's a lot to chew on.

MYLES UDLAND: I'm going to be interested to see what Airbnb's first couple of years look like as a public company, because we all remember when Uber and Lyft became public, and the stocks went up a lot, and then all the analysts came out, and they were all basically saying, Sozzi, similar versions of what you were outlining there. And then there was an adjustment period, and it was a couple of really hard quarters, even notwithstanding the pandemic, which took a bite out of that business.

But both companies settled down, got it together, and started to figure out how to manage the Street through their own growth trajectory. I think Airbnb's 2020 did a lot of really nice things that you'd like to see as an investor. They were able to grow sales after they made huge cuts in costs in an emergency back in the spring.

But I think the fullness of the valuation, as you talk about their size, likely indicates that we're going to see a similar kind of dynamic. But I think it's an important one, and it's a reminder to all businesses that public markets are very accepting of who you are. It just takes some time for people to get to know you.

So I think you know the first handful of earnings calls here for Airbnb are going to be very interesting as the company, again, I think, tries to figure out how it wants to communicate to Wall Street its own vision for growth.

Because yeah, you can say that Wall Street-- better than sliced bread, blah, blah, blah, blah, blah. Wall Street's guessing at how Airbnb thinks about itself. You even had Brian Chesky come on and spend an hour with analysts in a very on-the-record public setting, yet, to outline that vision. And I think that's going to be very important as we go forward for the company here next year-- this year. It is next year, though.

JULIE HYMAN: This year. Got to get used to saying that, don't we?