Quarterly reports are coming out. The media is abuzz about what this means for the future of Airbnb. Many people are wondering if they should buy Airbnb stock, given that the company is still worth billions of dollars.
Airbnb has reached a deal to cooperate with Japan’s four largest banks on home rental insurance, which will provide security for landlords who want to rent their apartments through the site.
These partnerships have led many people to believe that Airbnb is now on its way to being profitable, which might lead it to be listed publicly on the NASDAQ or NYSE in 2019. But all is not so rosy. Airbnb has also seen some major legal battles over discriminatory practices, taxes, and limits imposed by cities on short
What is Airbnb?
Airbnb is a platform for people to rent out their properties and room, house, and more to tourists and locals.
They connect People who need a place to stay with property owners in need of extra revenue, and many people want to make some extra cash by renting out their rooms or homes. It’s a booming business — and a huge new option for tourists looking for a new way to travel or for residents looking to increase their income.
However, as much as Airbnb is growing, it is still not profitable yet. At the beginning of 2017, it had only $12 million in revenue. According to Business Insider, Airbnb has created a giant in the travel space, but it hasn’t quite figured out a way to turn that into profit yet.
Is Airbnb good for investors?
It’s important to note that Airbnb is still highly unprofitable, and it doesn’t produce any substantial returns to shareholders.
The company burned through $450 million last year. In 2017, it lost nearly $500 million on revenues of $2.9 billion.
Airbnb is hoping that its fast growth of 4 million active properties and 700,000 paying hosts will soon make it profitable. To achieve this, it hopes to scale its sales and marketing, both internationally and in the U.S.
In the United States, Airbnb plans to make a huge push into its travel business this year. It hopes to create as many as 10,000 more events at Airbnb hosts’ homes every month this year.
The company also plans to attract more advertising revenue.
Why should you invest in Airbnb?
There are some reasons why Airbnb should make some investors excited.
Tourism in cities is increasing globally. Airbnb is meeting this demand, and the company has just completed a “billion dollar fund” that will be invested in tourists destinations. Airbnb will operate in 73 countries by the end of 2018, with more than one million listings in more than 60,000 cities in more than 80 countries. But most importantly, Airbnb is addressing the demand for rental accommodation in an increasing number of cities, cities with large housing shortages, and cities with many expatriates, including Paris, Amsterdam, Barcelona, London, Singapore, and Sydney. According to Forbes, Airbnb is valued at $31.8 billion, though that number is yet to be independently verified.
What are the risks of investing in Airbnb?
The first major risk with investing in Airbnb stock is regulatory risk. That’s the risk that the company will lose a large part of its business with the sudden realization that certain cities and towns aren’t on the “list” of welcoming places for Airbnb hosts.
For example, San Francisco doesn’t allow Airbnb hosts to rent out all the units in their units unless they are actually present in the unit. While Airbnb is not solely responsible for the policies San Francisco has put in place to limit Airbnb hosts, these regulations are both controversial and unfair.
The second major risk to investing in Airbnb is the worry that the company is going to face significant legal and financial setbacks in the future.
Airbnb will continue to face big legal battles, particularly with landlords. Its competitors will not stop until they have an effective and legal means of crushing the competition. This makes Airbnb one of the most disruptive companies of the new century.
However, if Airbnb can increase the number of landlords it works with in the United States, then there is a chance it can be profitable. Once the company reaches profitability, it will go public.