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The rickety elevator was a bit scary, making the tiny top floor apartment in Rome’s Monti district more than one floor with no elevator. In Edinburgh, the spacious mansion with brightly colored walls and decorative twee touches looked like the set from a Wes Anderson movie. A Vancouver skyrise provided stunning views of sunrise and sunset. And in Florence, oh, Florence, a cozy and warm base was perfect for exploring this amazing city.
Airbnb claims to have facilitated 825 million visits in 13 years of existence, but without me and my family it would only be around 824,999,910. Either way, it’s an incredible achievement. The internet has proven to be a fertile ground for germinating new markets and overloading some of the old-fashioned ones, whether for short stays, car rides through town or to sell your collection of Beanie Babies.
This week we saw the spectacular debuts on the stock exchange of two of these companies. DoorDash raised $ 3.4 billion by valuing its stock at $ 102 only to see it jump to $ 186 on Wednesday. Airbnb made $ 3.5 billion by selling shares for $ 68. The stock closed at nearly $ 145 yesterday. This puts the company’s stock market value at over $ 100 billion, more than Marriott, Hilton, InterContinental, Hyatt, Choice, Wyndham, GreenTree, and Red Lion combined (but only more than the top two or three if you include debt).
On the one hand, you can understand why investors showered Airbnb this week. Before the pandemic, revenue was growing 30-40% per year with gross margins of around 75%. Marriott’s revenue last year only grew 1% and has to pay the expenses of the more than 7,000 hotels with 1.4 million rooms it owns no matter what. Of course, Marriott also reported a profit of $ 1.3 billion in 2019, while Airbnb lost $ 674 million.
Which one do you prefer to own for the next 10 years? Investors say Airbnb.
This is not necessarily a good thing. Despite my pleasant stays around the world, many studies have found that the company’s service has a significant impact on increasing rents by reducing the number of housing units available to residents of large cities (although Airbnb disputes the studies and points out that some funded by the hotel industry). This means that while travelers can save a bit by avoiding hotels, the cost to residents is likely higher. And if Airbnb can support local tourism, it has also brought visitors to the neighborhoods sometimes ill-equipped to face the onslaught (in the same way that Waze turned some neighborhood streets into crowded race tracks). Can this be regulated by regulation and / or taxes? I am not sure.
The question that worries more people right now seems to be whether Airbnb’s IPO, after DoorDash, Snowflake, and other big tech flyers, indicates that the stock market has entered a bubble. speculative that could end badly like the Internet bubble 20 years ago. I’m just clarifying that while 19 IPOs doubled on the first day of trading this year, according to CNBC reporter Leslie Picker was 78 in 2000 and 115 in 1999. And the story that burst the dot-com bubble was a Barron’s coin calculating that new businesses were burning money so quickly that many would soon be bankrupt. Airbnb posted positive cash flow from its operations before the pandemic and currently has more than $ 6 billion on its balance sheet. Now maybe electric vehicle stocks are in the danger zone and some of the new high profile IPOs, but overall they look less volatile.
Finally, I would be remiss if I did not ask those of you who want a closer look at DoorDash and Airbnb to check out some of Danielle’s coverage this week. I don’t know if she sleeps at all, but besides covering up Facebook antitrust trial, she interviewed DoorDash CEO Tony Xu drafted the initial receipt for the two By Dash and Airbnb, and will soon have a feature film on DoorDash. Have a good week-end.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com
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On the last episode of Fortune Brainstorm podcast, we discuss how technology fuels the holidays. Retailers with services like curbside pickup fare much better than others, according to Fortune Phil Wahba. Brainstorm hosts Brian O’Keefe and Michal Lev-Ram also chat with Loren Padelford, vice president and general manager of Shopify, and Ben Jones, CEO of Ohi. Its smart warehousing business enables same-day delivery for smaller brands looking to compete Amazon and Walmart. Listen to the episode here.
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