Airbnb’s IPO Will Be Hot. Why Its Stock Will Be Worth the price.

Airbnb could be one of the hottest initial public offerings of the year.

The company has become synonymous with the home-sharing and rental concept that it pioneered more than a decade ago. And despite competition from online travel operators Booking Holdings (ticker: BKNG) and Expedia Group (EXPE), which runs the Vrbo site, it remains the industry leader.

“It’s the Apple of travel,” says James Cordwell, an Atlantic Equities analyst. “Like Apple, Airbnb’s brand-building approach and design of its app have helped foster a sense of community and connection among users.”

During the pandemic, risk-averse travelers have favored private homes over hotels, and that has enabled Airbnb, which will trade under the ticker ABNB, to rebound more quickly than traditional lodging companies. Airbnb reported an after-tax profit of $219 million in the third quarter, compared with a loss of $576 million in the second quarter.

With its asset-light business model and global presence, the company is poised to benefit from a rebound in travel. While the current quarter is expected to be weak amid a worldwide resurgence of Covid-19, investors are looking toward 2021 and 2022, when the world should normalize with widespread vaccinations.

The proposed market value of Airbnb—around $30 billion at the top of the proposed pricing range of $44 to $50 a share—isn’t cheap based on traditional financial measures like earnings and sale…


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