The upcoming IPOs of Airbnb and Doordash are great examples of two views on the market.
"IPO floodgates open as Airbnb, DoorDash prep stock-market debuts. 2020 is shaping up as the 2nd best year for IPOs since the dotcom bubble" (foxbusiness)
Airbnb took a big hit at the beginning of the year, leading to some tough decisions to slim down and focus the business. Their Q3 results showed economics similar to Booking, a company with a great record of execution and healthy margins even in the current environment. Their valuation expectations seem as reasonable as one could hope to find in the current market.
As the Economist notes, "Airbnb’s stockmarket debut will be a hit, Never mind its murky long-term prospects"
Doordash has been thinking about an IPO for some time, but could their financials support their private valuation? They are clearly seen as a winner from Covid. But while they are clearly bigger, their margin profile is no better than grubhub in Q3. If not better margins now, when? If they do indeed gain their target valuation, I expect they'll be looking to buy up some growth and bulk soon.
As the Economist notes, "Doordash is a dish served piping hot. Will it cool?"
Comments