There's money to be made in divvying up assets the right way.
- Zipcar is thriving as its fleet of more than 8,000 vehicles serves its membership base of more than 575,000 drivers.
- Netflix and Coinstar's Redbox optimize a movie disc by renting it over and over again.
- Berkshire Hathaway's Netjets and Bombardier's Flexjet provide fractional jet ownership for those who can't afford a corporate jet or just don't want the ownership hassle.
Today we can add another name to the ranks of publicly traded sharers, with the successful debut of HomeAway (Nasdaq: AWAY ) .
If you're not familiar with HomeAway.com, VRBO.com, or one of the many other HomeAway websites, the company provides a way for owners of vacation properties to rent them out when they're not using them.
Set aside all of your negative feelings about timeshares, destination clubs, and that second home in the mountains that was foreclosed on. HomeAway is actually cashing in on the demise of high-end travel. There are 560,000 properties listed through HomeAway's network of sites, largely from owners who are turning to short-term rental income to help offset their ownership costs.
And it works. HomeAway attracts 9.5 million unique monthly visitors seeking out beachfront homes, metropolitan condos, and that ski property you had to surrender to the bank last year.
HomeAway's revenue climbed nearly 40% last year, to $167.9 million, though a good chunk of that comes from the company's frenetic acquisitions of smaller sites. Organic growth still checked in at an impressive 28.6%.
Owners pay HomeAway to list their properties with appetizing descriptions and snapshots. It's effective because roughly three-quarters of HomeAway's subscribers renew their listings every year. That's an impressive retention metric when one considers that many of those who don't renew probably either unloaded the properties or their circumstances changed so that they no longer desire to share their digs.
HomeAway isn't perfect. The website operator has been losing money for years. One can also argue that the stock isn't exactly cheap. There are 79.8 million shares outstanding after today's debut, valuing the company at nearly $2.2 billion at the $27 IPO price. The stock opened at $34.92 this morning, trading as high as $42.30 an hour later. In other words, Mr. Market was valuing this company at nearly $3.4 billion just ticks into its trading life. That's a steep price for a profitless company that rang up just $167.9 million in revenue last year.
HomeAway will do well, though, because it's a textbook example of the network effect. Prospective travelers want to go to the site with the most listings, and property owners turn to HomeAway's sites because they know that that's where the getaway seekers go.
It also doesn't hurt that HomeAway is a great champion of the asset-sharing model that continues to grow in popularity. Sharing is caring, after all.
Have you ever used HomeAway, VRBO, or one of HomeAway's other properties for a vacation? What did you think? Share your thoughts in the comment box below.