With Snap Inc. going public sometime in March, investors will soon be looking for the next shoe to drop in tech initial public offerings (IPOs).
That’s where the Airbnb IPO comes in. Airbnb stock will likely be one of the most coveted new entries into the public market if it does in fact file this year. That would make an Airbnb IPO in 2017 one of the biggest potential moves for investors to watch. While there is currently no set Airbnb IPO date, some promising signs are pointing toward a filing in 2017.
With an Airbnb valuation of $30.0 billion, there are a lot of reasons to be excited for the company to become widely traded. While there’s no firm date set, CEO and co-founder Brian Chesky has said that the company was preparing an Airbnb IPO “as soon as possible,” with the caveat that the company did not intend to go public “in the near-term.” (Source: “Airbnb prepping to be IPO-ready, but still has no ‘near-term’ plans,” Wired, November 17, 2016.)
But one big factor is pushing an Airbnb IPO in 2017: profitability. The company managed to have positive revenue in the second half of last year, and it expects to see those gains continue, according to Bloomberg.
Contrast that with another hotly anticipated potential public filing, Uber Technologies Inc., in which that company has a similar valuation but lost an estimated $3.0 billion in 2016. Being in the black this early in a company’s lifespan, especially for tech giants, which are infamous for burning through cash, is a uniquely favorable position and may bode well for an earlier Airbnb IPO date.
Even more impressive is that the hotel-killing app managed to see net positive revenue, despite being mired in legal battles across the United States. Cities like New York and San Francisco passed laws limiting the number of nights a host can list their homes, obviously impacting Airbnb’s bottom line. (Source: “Airbnb’s First Profits Lay Groundwork for IPO,” Investopedia, January 30, 2017.)
Another reason why the potential Airbnb IPO in 2017 is perhaps more valued than an Uber IPO is the lack of competition. Uber faced troubles in the Chinese market, trying to out-muscle competitor Didi Chuxing before admitting defeat and selling off its Chinese operation for $35.0 billion to the Chinese car service. Couple that blow with Lyft, Inc. gaining in the American market, and it’s clear why some investors prize Airbnb stock over Uber.
Of course, the Airbnb valuation is still considerably lower than Uber’s, but the company has a number of feathers in its cap that could ultimately make it a more desirable investment for those eager to get back in on the tech IPO game following the dismal 2016.
Will Airbnb Go Public in 2017?
There’s no concrete information one way or the other concerning an Airbnb IPO in 2017.
So will Airbnb go public in 2017? The answer is, we just don’t know. Much like the Airbnb price per share, all the information regarding the filing to go public for the company will only be available when tangible steps are taken to put the tech stock on the market.
Take, for instance, another tech giant entering a similar situation in 2017: Palantir Technologies.
A Palantir IPO is among some of the most anticipated on the market. Airbnb’s valuation is similar to that of Palantir, both in the tens of billions of dollars, and both are projected to be profitable in 2017. These two factors working in concert may be enough to push them over the edge and see them on the way to a public filing.
In fact, the two might serve as dominoes for each other, which is to say, if Palantir goes public and is a huge success, that may bolster the confidence of Airbnb to follow suit and vice versa.
Snapchat’s IPO could fill a similar role. With the idea of Snapchat going public becoming much more concrete, the leadership of the other tech behemoths may be watching to feel out how receptive the markets are to new tech IPOs.
Airbnb Stock’s Obstacles
So what’s preventing an Airbnb IPO? Besides a reluctance to rush into things as demonstrated by Airbnb CEO Brian Chesky and others, there are the legal troubles in which the company finds itself mired.
Much like Uber, the disruptive nature of Airbnb has caused some cities to push back against its rapid growth and the resultant damage done to legacy industries like hotels. Not to mention, there have been valid safety concerns raised over the years relating to Airbnb’s practices.
Cities are still struggling to find a way to balance all these competing interests in order to effectively regulate the home sharing service. As mentioned above, some of the biggest cities in the world (and therefore prime destinations for tourists looking to travel on the cheap) have begun to issue stricter controls on Airbnb, which we can expect to see more of in 2017.
And that’s just the United States. As the service continues to thrive worldwide, bodies like the European Union (EU)—which tend to be more regulation-happy compared to the U.S.—could begin to draft far-reaching policy that could potentially alter the way Airbnb operates or the outlook of the company going forward. Not to mention that countries themselves may also impose their own rules on the app.
While none of this is guaranteed to happen, signs are pointing toward cities and countries alike stepping up to the plate to play a bigger regulatory role in these disruption-focused apps, no matter how popular they may be.
What’s Next for Airbnb IPO?
2017 could very well be a great year for tech IPOs, one in which some of the hottest private companies hit the market. Airbnb is certainly counted among that number.
But the thing about this year is that, while the timing may seem ripe for a glut of IPOs, there’s no way to accurately predict which companies will file.
For the investors enthusiastic and chomping at the bit to get in on Airbnb stock, you’re not alone, but you have to be patient. The name of the game at the moment is to wait and watch for inklings that the company is in fact pushing toward an IPO.