The surge in remote work has allowed more people to have a choice in where they live and work, and Airbnb (ABNB 2.04%) is playing a significant role in facilitating temporary stays. In this clip from "IPO & SPAC Show" on Motley Fool Live, recorded on April 11, Motley Fool contributors Nicholas Rossolillo, Jason Hall, and Danny Vena discuss the booking platform's impressive rebound and why its stock is one investors should watch.
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Nicholas Rossolillo: Airbnb. This is a unique one in that all of the companies we've talked to up to this point, their businesses were booming in 2020. Of course, the travel industry was absolutely not booming in 2020. But Airbnb has their IPO anyway and it was a tremendous success. We'll talk about why that is when we catch up with where they are today. But, at the time of the IPO in December 2020, they raised $3.5 billion in proceeds. Stock was up 135% from the IPO price the first day of trading. Revenue was down 30% that year in 2020. They reported a pretty big net loss even when excluding the stock-based compensation. They lost $1.8 billion in 2020. It's because travel had pretty much ground to a screeching halt. No one was traveling anywhere in 2020. Here's why the company went on to be such a success. It's because of the expectation of what was coming. In 2021, the company just recently reported its full-year results, 301 million nights and experiences booked in the year. That was a 56% rebound from 2020. The total value of bookings nearly doubled and was actually up 23% from pre-pandemic levels, which led to a big increase in revenue. Revenue was back to achieving new all-time highs. Specifically, in the fourth quarter alone, revenue was up 38% compared to 2019. That's significant. A lot of travel companies are still trying to reachieve pre-pandemic levels. Airbnb is there already. Net loss of $352 million, that was a narrowing of the net loss from $674 million in 2019. They were free cash flow positive though to almost $2.2 billion and tons of cash and investments on the balance sheet net of debt, almost $6 billion in cash and short-term equivalents net of debt. That is a significant differentiator for Airbnb against the other companies that play in this space. One of the other differentiators I think with this company is this change in mindset that has taken place with the whole remote work movement that has taken place in the wake of the pandemic. Airbnb is positioning itself as a facilitator of that. Longer-term stays of at least a week or more has been a key segment. It was over half of the nights booked on the platform in the fourth quarter last year. Even their CEO is buying into this. Brian Chesky said that he is going to stay in a different place every few weeks using Airbnb. This is a really interesting story. It's not just a travel stock, but I think this is just almost a change in lifestyle bet as people rethink work and work/life balance. We're seeing a return of growth. Nights and experiences booked are expected to return to 2019 levels this year. This is a really interesting company. I think it was a unique one in 2020 because it was struggling at the time. But we can see why the market was so excited about it. Now, a year and a quarter removed from the IPO, Airbnb is killing it.
Jason Hall: My favorite metric and it's emblematic of everything you were just saying is they report stays of four weeks or longer, 28 days or more. I think it's still somewhere around 20% of bookings. That says so much about exactly what you're saying and that's something hotels can't compete with.
Rossolillo: It's really significant. Go ahead, Danny.
Hall: You guys are just adorable. You really are. [laughs]
Danny Vena: I have to admit to being wrong about this company. I was initially dubious thinking, there's no way that this is going to, I couldn't envision the market. But they have done such a good job in embracing remote work culture and adding experiences, I think they've done a really good job at that.