British savers queue up for Airbnb multi-billion-dollar float despite danger

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British savers queue up for Airbnb’s multi-billion-dollar float despite red flags over a possible tech bubble

  • Hargreaves Lansdown last week asked customers to register their interest 
  • 4,000 private investors have said they are thinking of buying Airbnb shares 
  • But Airbnb has not fully disclosed its profits & is battling a series of crackdowns 

Thousands of British savers are lining up to buy shares in Airbnb’s multi-billion-dollar stock market debut next year – despite red flags over a possible tech bubble.

Hargreaves Lansdown, the UK’s biggest retail stockbroker, last week asked customers to register their interest after the room rental giant revealed plans to float in 2020.

Around 4,000 private investors have already said they are thinking of buying Airbnb shares, raising the prospect of the float being more popular than the much-hyped Uber listing in May, for which around 10,000 Hargreaves customers registered in advance.

Danger: Airbnb has not fully disclosed its profits and is battling a series of crackdowns

Danger: Airbnb has not fully disclosed its profits and is battling a series of crackdowns 

The huge interest comes even though California-based Airbnb has not fully disclosed its profits and is battling a series of crackdowns.

Strict rules on short-term letting in places such as Paris and Barcelona could hit growth plans, while councils in historic cities such as Edinburgh and Bath in the UK have complained about Airbnb properties being used for raucous parties.

And the plans for a blockbuster listing, expected to be in New York, follow warnings of a bubble in tech stocks after a string of disappointing stock market debuts.

WeWork, the shared office space company, this month delayed its float to the end of the year at the earliest, after its prospectus revealed a company burning through cash and questionable corporate governance methods.

Shares in Lyft, an American taxi-hailing company, and Slack, an office messaging system, have both crashed by more than a third since their multi-billion-dollar listings earlier this year.

Uber was forecast to have a value of up to $120billion (£97billion) at its stock market debut but is now worth $55billion (£44billion).

Airbnb’s employees have been putting pressure on the firm’s founders to go public because they want to cash in their stock options

Airbnb’s employees have been putting pressure on the firm’s founders to go public because they want to cash in their stock options

It emerged last week that Airbnb’s employees have been putting pressure on the firm’s founders to go public because they want to cash in their stock options. 

Richard Holway, chairman of TechMarketView, said Airbnb is ‘a better bet than WeWork, Uber and Lyft’.

He added: ‘I think Airbnb has a good business model. It gets a commission for every use, it has no physical assets and it is already the market leader.

‘But we do not know the price yet. It is extremely difficult for new investors coming in at an IPO [initial public offering] to make money – as most of the current crop have proved. All the money has already been made.’

Airbnb started life as AirBed & Breakfast in 2008 after two of its co-founders, Brian Chesky and Joe Gebbia, let out their apartment in San Francisco. It now has seven million listings in 100,000 cities and reported revenues of ‘substantially more’ than $1billion for its second quarter this year.

Uber was forecast to have a value of up to $120billion (£97billion) at its stock market debut but is now worth $55billion (£44billion)

Uber was forecast to have a value of up to $120billion (£97billion) at its stock market debut but is now worth $55billion (£44billion)

It is secretive about its financial performance but was most recently valued at $31billion (£25billion) and reportedly made profits of $93million (£75billion) in 2017.

Chris Beauchamp, chief market analyst at spreadbetting firm IG, said there will be ‘huge demand’ for Airbnb shares because it is ‘one that a lot of younger people will recognise’.

‘If when the official documents come through, and you see they are doing a WeWork and burning through cash, then you might see enthusiasm dim. The investing rationale is maybe a bit stronger than WeWork, but it depends on how these numbers play out.’

IG will let investors bet on Airbnb’s float price ahead of its flotation, through a ‘grey market’ that tests investor appetite. Similar grey markets run by IG for the floats of Facebook and Royal Mail have come close to predicting the listing price.

A spokesman for Hargreaves Lansdown said: ‘Household name IPOs attract interest from investors, particularly those where people have direct experience of their products and services.’

 

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