Airbnb, DoorDash And The Appeal Of The ‘Platform’ IPO


Platform companies are all the rage on Wall Street.

Airbnb, in only the latest example, priced its initial public offering (IPO) on Thursday (Dec. 10) far above initial targeted ranges.

The company’s shares come to market at $68 a share. That compares with a reported range of $44 to $50, as of earlier this month.

The splash — with trading yet to begin — follows the DoorDash IPO that debuted this week, where shares soared more than 80 percent in their first day of trading.

Airbnb, of course, comes to market after the pandemic hit operations earlier this year — and then things snapped back. As stated in the company’s S-1 filing with the Securities and Exchange Commission, domestic travel has helped the company rebound from nadirs seen as the coronavirus brought global economies to a standstill.

As has been seen elsewhere with platform companies, red ink dominates the picture — though it should be noted that in contrast to, say DoorDash (and with the great pivot toward online delivery ordering) Airbnb’s top line was more than dented due to public health concerns. As noted in this space previously, on Sept. 30 of this year, revenues were down 32 percent to $2.5 billion year over year, while operating losses grew from $173 million to $489 million over the same period.

But: As recounted in the filing, Airbnb noted “our business model started to rebound even with limited international travel, demonstrating its resilience.”

The company detailed in the filing that from April through June 2020, “we saw a steady rebound in gross nights and experiences booked before cancellations and alterations, which were down 21% in June relative to the same period in the prior year.”

From July through September 2020, gross nights and experiences booked had been stable, said management, down approximately 20 percent relative to the same period in the prior year.

The Lure Of The Platform Model 

The lure of the platform model is apparent in the stickiness of its client base — where, in Airbnb’s case, where the filing details 5.6 million active listings across 4 million hosts, with 84 percent of revenues coming from hosts that had at least one check-in made before December 2018 and 79 percent of hosts coming directly to the company’s platform to sign up. Domestic nights and experiences grew 14 percent year-over-year, showing just where the preferences lie — and the marketplace model, of course, caters to those preferences.

The matching of buyers and sellers is nothing new, but in the digital age, the online marketplace demands the streamlining of the process well beyond the initial discovery that exists as demand seeks supply and vice versa. That includes vetting each side of the transaction — ascertaining that people are who they say they are, and of course facilitating transactions. Platform assets can be leveraged, can scale, can be used to create ancillary businesses. That’s been readily apparent in Uber’s efforts to move beyond its core ride-hailing segments to embrace food delivery and logistics.

We’ll leave the valuation questions on the Street for those who live and die by the Street. The spate of online marketplace IPOs, whether too hot to handle or a trend set to continue, teach us this:

Marketplaces have the advantage of helping people or businesses monetize everything from bric-a-brac lying around the house (eBay) to empty space that has a mortgage on it (Airbnb).  The pandemic has underscored the urgency of being flexible. The online market, with its on-demand commerce, booking, payments and cross-border and cross-vertical offerings all in one place, is nothing if not flexible.


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