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What’s Behind Airbnb’s $31B Valuation?

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Pitched to be worth a staggering $31B, Airbnb is now valued higher than Expedia and Hilton.  Last year, Airbnb reported sales of $2.6B with a net profit of $100M or 4%. This indicates that Airbnb is valued 12x sales. Is the rental startup’s valuation inflated or justified?

Airbnb is no longer a one trick pony. It started off as a platform connecting homeowners to travelers. The company has now partnered with Resy in the restaurant reservation space. Airbnb is also offering guided tours and experiences.

Total addressable market is $150B

The total addressable market for hotel lodging stands at a humongous $150B. Over 50% of hotel bookings are online and Airbnb accounts for 35% of total online bookings, up from 10% in 2014, according to this Pitchbook report.

Airbnb listings are now available in 191 countries and in over 81k cities. Its growth is dependent on the number of hosts and guests it can attract on the platform.

Airbnb’s CEO Brian Chesky wants the company to become the Amazon for travelers. He expects 1B people to use the platform by 2028, a monumental jump from the 400M customers in the first 10 years since launch.

Airbnb’s listings have grown rapidly from 500k in 2013 to over 5M in 2018. The company has successfully scaled up and is also profitable. Now the challenges are maintaining a robust growth rate with a focus on enhancing customer experience.

Over $1B in quarterly revenue

Last week, Airbnb reported that its quarterly revenue for Q3 2018 was substantially over $1B. This marked Airbnb’s strongest ever quarter. The holiday quarter this year is likely to shatter revenue records for Airbnb.

Q3 was the first quarter where Airbnb reported sales over $1B. This revenue growth was driven by key overseas markets, coupled with growing demand in smaller towns and suburban cities.

The number of booking’s in Beijing rose 91%, followed by Mexico at 79% and Birmingham at 70%.

Risks impacting Airbnb

Though Airbnb has been a goldmine for investors and founders, it is also fraught with business risks. Local authorities have now started to crack down on listings. There have been charges that owners are using Airbnb’s platform to create unregulated hotels.

The company has also been accused of creating housing shortages. According to data analysis firm AirDNA, cities such as Berlin, San Francisco and Santa Monica all experienced a drop in listings after strict regulations were passed.

Further, online portals such as Booking.com have started advertising home rentals and apartments on their website and are now a direct competition to Airbnb.

Operating profits might reach $3.5B by 2020

This Fortune report had predicted Airbnb’s operating profits to reach $3.5B by 2020. In case the company manages to achieve this target, it would put Airbnb in the top 15% of companies in the Fortune 500.

Airbnb is just not banking on growth. It knows profits are equally important. Investors remain buoyant as Airbnb is one of the few unicorns to achieve sustainable profitable revenue growth.

Airbnb is eyeing an IPO (initial public offer) in the next twelve months. It might very well be the most anticipated offering of 2019.

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This Ex-NBA All Star May Just Have The No.1 Wine In The World

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Source: Forbes

Former NBA All Star Yao Ming had his career cut short by injuries. But he’s rebounded, big time, with big scores off the court.

(LOL at these sports cliches…)

Ming founded Yao Family Wines in California’s Napa Valley in 2011. Which is not a major deal; lots of celebrities make mediocre wines that eventually drop off.

Anyway, back in 2015, Ming raised $2M on crowdfunding platform Crowdfunder to scale his own wine. Here’s how it looked back then, according to the Wall Street Journal:

With Beijing’s anti-corruption campaign sapping demand for expensive wines, Yao Family Wines, the biggest seller of high-end Californian wine in China by value, is shifting its focus from Chinese banquet tables to U.S. steak houses. Now 15% of the winery’s revenues come from the US, compared to almost zero at the beginning in late 2011. The company said it has managed to grow its sales in a tough environment, without giving more details.

And now, Ming’s wine—legitimately—is now one of the best in the world, with an approval rating of 95+ from the world’s single most influential wine critic, Robert Parker of The Wine Advocate.

Here’s what he wrote:

“I am aware of all the arguments that major celebrities lending their names to wines is generally a formula for mediocrity, but that is not the case with Yao Ming. These are high-class wines. The two Cabernets are actually brilliant, and the Reserve bottling ranks alongside just about anything made in Napa.”

Another influential voice of wine the Wine Enthusiast went even further, awarding his wines 97 and 95 points respectively.

Check out his winery here.

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Uber Goes Public And Immediately Loses Over $6B In Value

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UBER just went public in the most anticipated IPO since Facebook went to Wall Street.

The ride-sharing company officially hit the New York Stock Exchange Friday, pricing its IPO at $45 a share, which put the ride-hailing company at $81B at 180M shares available—far below their initial $120B projection in their filings.

Uber ended the day at $41.60—down nearly 8% from its listing price, leading to a $6B+ valuation loss.

For perspective: Uber’s last private valuation was about $76B. It’s now worth $75.5B.

What’s happening?

Uber’s not the only one crashing out the gate. Even though Lyft beat Uber to the IPO punch, since going public in March, Lyft has lost 29% of its value.

Uber’s been plagued by a number of issues, compounded by the fact that none of the tech unicorns are profitable yet. Uber, for instance, burned through $1B in Q1 alone.

“They waited too long to go public,” Former NYSE President Tom Farley said. “Some of the issues they had — I’ll call it culture — some of the issues they had with their culture would’ve been solved in a public market. You wouldn’t show up on a quarterly conference call every quarter and have three or four new stories like they were having for 18 straight months.”

Did Uber IPO too late?

Although early investors made out like straight BANDITS—just look at Lance Armstrong—investors in the later stage haven’t been as lucky.

“I mean, you look at all the money invested in Uber — 25 billion bucks,” Farley said. “Their pre-money valuation last night was [$]73 [billion]. This is a 2.8x investment.

“That’s great and all, but the initial investors got 10,000 times their money. So the recent people, they haven’t been making money. This is a company that has needed public discipline, this is a company that has needed a public currency, and it’s a company that should have gone public three or four years ago.”

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Morgan Stanley Just Released Its List Of Top 10 Companies They’re Investing In

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Morgan Stanley just announced the second cohort of its Multicultural Innovation Lab, an accelerator program for technology and technology-enabled start-ups in the post-seed to Series B funding rounds.

The program—now in its second year—targets companies with a multicultural or woman founder, co-founder, or any Chief (insert) Officer in charge of what it calls “innovative solutions across sectors.”

According to various studies, female founders, founders of color—and both—receive as little or less than 1% of venture capital funding—a gap Morgan Stanley says it wants to bridge.

“There is a compelling business case for investing in startups led by women and multicultural founders, yet, as found in our recent report, there is a large market inefficiency to accelerate businesses led by these founders,” Managing Director Alice Vilma says. “We are working to directly address this funding gap, one cohort at a time.”

With less than 3% admitted into the program, each startup will take a seat on its on floor inside Morgan Stanley’s global headquarters in Times Square, New York.

In addition, the companies funded receive pretty precious billboard space all over Times Square. It’s real fancy.

(Oh, snap!)

Here are the 10 companies that were selected:

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