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Why Airbnb is great for Wall Street but not for everyone else

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The rickety elevator was a bit scary and made the tiny top-floor apartment in Rome’s Monti neighborhood more like a sixth-floor stroll. In Edinburgh, the spacious accommodation with colorful walls and two decorative elements looked like the set of a Wes Anderson film. A skyrise in Vancouver offered breathtaking views of sunrise and sunset. And in Florence, oh Florence, a comfortable, cozy base was perfect for exploring this amazing city.

Airbnb says it has generated 825 million visits in its 13 year history, but it would only be about 824,999,910 without me and my family. Either way, it’s an amazing feat. The internet has proven fertile ground for tapping into new markets and recharging some old-fashioned ones, be it for short term stays, driving around town, or selling your collection of beanie babies.

Aaron Pressman / Fortune

This week we saw two of these companies make spectacular public debuts. DoorDash increased its stock by $ 3.4 billion to $ 102, to climb to $ 186 on Wednesday. Airbnb received $ 3.5 billion for selling shares at $ 68. The stock closed at nearly $ 145 yesterday. This puts the company’s market value at over $ 100 billion, more than Marriott’s. Hilton, InterContinental, Hyatt, Choice, Wyndham, GreenTree, and Red Lion combined (but only more than the first two or three if you include debt).

On the one hand, you can understand why investors showered Airbnb with love this week. Before the pandemic, sales grew 30% to 40% annually and gross margin grew 75%. Marriott’s revenue only grew 1% last year and has to pay the cost of the 1.4 million-room + 7,000 hotels it owns, whatever happens. Of course, Marriott also made a profit of $ 1.3 billion in 2019, while Airbnb lost $ 674 million.

Which one would you rather own for the next 10 years? Investors say Airbnb.

It’s not necessarily a good thing. Despite my pleasant stays all over the world many studies have found that the company’s service is making a noticeable impact on rent increases by making less housing available for residents of major cities (although Airbnb denies the studies, suggesting that some were financed by the hotel industry). This means that while travelers can save some by avoiding hotels, the cost to residents is likely to be higher. And while Airbnb may be boosting local tourism, it has brought visitors to the neighborhood as well sometimes ill-equipped to cope with the onslaught (Similarly, Waze has turned some neighborhood streets into crowded commuter racetracks). Can this be remedied through regulation and / or taxes? I’m not sure.

The question that now occupies more people seems to be whether Airbnb’s IPO after DoorDash, Snowflake, and other high-tech high-flyers signals that the stock market has entered a speculative bubble that, like the internet bubble, ended badly 20 years ago could. Just want to point out that 19 initial public offerings doubled on their first day of trading this year. according to CNBC’s ace IPO reporter Leslie Picker, the number was 78 in 2000 and 115 in 1999. And the story that burst the internet bubble was one Barrons Calculating that new businesses were burning up cash so quickly, many would soon be out of business. Airbnb was posting positive cash flow from operations prior to the pandemic and currently has more than $ 6 billion on its balance sheet. Now maybe EV inventories are in the danger zone and some of the high profile new IPOs, but overall it looks less volatile.

After all, I wouldn’t be sure if I didn’t direct those of you who want a closer look at DoorDash and Airbnb to check out some of Danielle’s coverage this week. I don’t know if she sleeps at all, but in addition to Facebook Antitrust litigation, you interviewed Tony Xu, CEO of DoorDash, wrote the first market reception of both DoorDash and Airbnb, and will be taking a look at DoorDash shortly. Have a nice weekend.

Aaron Pressman
@ampressman
aaron.pressman@fortune.com

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On the latest episode of capital In the brainstorming podcast, we discuss how technology drives the holidays. Retailers with services like roadside collection do far better than others capital Phil Wahba. Brainstorming hosts Brian O’Keefe and Michal Lev-Ram also speak to Loren Padelford, Vice President and General Manager at Shopify, and Ben Jones, CEO of Ohi. Its smart warehouse operation enables smaller brands that want to compete with them to get same-day delivery Amazon and Walmart. Listen to the episode here.

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