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By Xie Dongxia / Midnight
Source / connection insight (ID: lxinsight)
Aibiying, which has stepped all over the world, landed on NASDAQ on December 10, us time.
The opening ceremony of new shares from all over the world has been completed.
The opening price of aibiying soared to 146 US dollars per share, more than twice the IPO price of 68 US dollars. The intraday price once reached $165 per share, with a market value of more than $100 billion.
Finally, the first day trading price of aibiying closed at US $144.71 per share, with a market value of US $88.3 billion.
Aibiying share price
As the “ancestor of B & B”, aibiying has been preparing to go public since 2019. However, the original IPO plan was forced to be postponed due to a sudden epidemic at the beginning of the new year. In the first nine months of this year, aibiying lost nearly $700 million. To cut costs, Abbey laid off a quarter of its employees and cut some of its non core businesses.
The IPO road of aibiying this year is quite rough, and its CEO Brian Chesky said in an interview: “I didn’t expect that we would end this year like this.”
“The impact of the epidemic is even greater than that of the two world wars,” Chesky said Although aibiying adjusted its business, cut down a lot of expenses, and launched innovative travel options such as online “cloud travel” and peripheral travel, it could not return to the pre epidemic business level in any case.
However, under the triple pressure of the company’s funds, employees and shareholders’ demands for equity realization, aibiying had to complete the listing work in this year’s difficult time.
The once hot sharing economy has nurtured the star unicorn of aibiying. However, with the declining market performance of Uber and Wework, the market’s confidence in aibiying has also fluctuated, and aibiying has experienced a roller coaster of valuation.
Now aibiying has successfully listed on the stock market and realized the soaring market value, which has a good new start. However, its business difficulties are still severe. How does aibiying finally break through?
Aibiying has to go public
According to the statistics of the world tourism organization, due to the global epidemic of new coronavirus, the average passenger flow in the northern hemisphere in July and August this year decreased by 80% compared with the same period last year.
The global tourism and accommodation industry suffered a lot in the epidemic, and aibiying is no exception.
According to the prospectus released by aibiying, in the first three quarters of this year, the company’s operating revenue was US $2.52 billion, a year-on-year decrease of 31.8%; the net loss more than doubled year-on-year to US $697 million; the net cash generated from operating activities was US $491 million, a decrease of US $910 million.
Screenshot of aibiying’s prospectus
In the first half of this year, the company had to shrink its business, lay off employees, and cut salaries for senior executives to maintain its normal operation.
When a company is listed on the stock market, it will sort out a relatively beautiful profit data. However, aibiying insists on seeking to be listed in the heavy blow of the epidemic. Such an unreasonable choice is actually the last resort.
Tight cash flow is one of the main reasons why aibiying is listed in the special period.
During March and April of this year, the total number of orders cancelled or changed on the aibiying platform exceeded 32.5 million, a record of the highest number of lost orders since the company started its business.
Aibiying not only needs to return the rent of passengers, but also subsidizes the loss of landlords. For this reason, aibiying has allocated 250 million US dollars to subsidize landlords whose orders have been cancelled.
A large number of refunds and subsidies led to a sharp decrease in cash. In April, Abbey raised $1 billion in bonds and equity from private equity firms Silver Lake and six Street partners to serve all stakeholders in the community.
But this fund may not be able to help aibiying to “get out of trouble” completely. As of September 30, Eby’s free cash flow was – 520 million U.S. dollars.
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In addition, the demands of employees and investors for the realization of shares are definitely the driving force for aibiying to go public.
Last year, the New York Times reported that in the summer of 2018, more than a dozen employees of aibiying had written to the company’s founders, asking for the sale of their stock options.
Many employees said that the company’s listing is far from expected, which makes them more and more stressed. It is not convenient for them to change jobs or move, or even to set up a family.
In the early stage of starting a business, aibiying used options to attract outstanding talents, and the shares held by employees will expire from November 2020 to mid-2021. If aibiying fails to go public in this period, the company may face the situation of low morale.
As a result, in September 2019, aibiying issued a one sentence statement saying: “it plans to go public next year.”.
“Our commitment to our employees is very strong,” Chris Lehane, senior vice president of policy and communications at ebyon, said in a statement. Our focus on long-term development has helped us build a very successful company. ”
In addition, the patience of capital is gradually disappearing. Since its establishment 13 years ago, aibiying has obtained about US $6.4 billion of venture capital and private equity group investment. Its shareholders include Silver Lake, Sequoia Capital, y combinator, DST, Temasek, tiger Global Fund and other well-known institutions.
On the day when investment institutions are looking forward to the listing of their companies, Doug Leone, a venture capitalist of Sequoia Capital, one of aibiying’s investors, once said that listing at a certain time was a “implicit social contract” borne by start-ups.
Cash flow shortage, employee anxiety and shareholder patience are all urging aibiying to complete its listing plan in 2020 when the epidemic is difficult.
Valuation roller coaster
“We had doubts about the operation mode of aibiying, but we had a good impression on the founder.” At the beginning of its founding, Paul Graham, co-founder of Y combinator, a Silicon Valley business incubator, commented that he had provided $20000 of start-up capital for abiying.
In 2007, Brian Chesky and Joe gebbia, the two founders of aibiying, shared the rent by putting three inflatable mattresses in the living room and providing breakfast for tenants for $80 a night.
Audemars Pigeut welcomes co-founder Nason Blekasyak, Jo Jibiya and Brian Cheski (from left to right), Audemars Pigeut welcome WeChat official account.
But at the beginning of ebiyin, “renting a stranger’s house” was not popular. Chesky and gebia could only sell cereal to support the company.
However, soon the sharing economy swept across the United States, and aibiying became the representative of shared accommodation. Focusing on design and personalized experience on the platform, local short-term B & B has become a new trend of tourism accommodation. It also forms the “three musketeers of sharing economy” with Uber in the industry and Wework in the office industry.
“Uber is redefining the transportation industry, and ebyon is doing the same for the hotel industry.” Softbank sun Zhengyi has repeatedly said that he is optimistic about aibiying.
In April 2009, aibiying obtained the investment of US $600000 from Sequoia Capital, and in the following years, it almost kept the annual financing rhythm. Taking advantage of the hot wind of sharing economy, aibiying has entered into rapid development.
In March 2017, more than 40 institutions participated in the f round of financing, and the company’s valuation reached US $31 billion, which did not change significantly until this year’s IPO.
In 2019, the sharing economy ushered in the IPO boom, in which the market value of Uber, the online car Hailing giant, was pushed to the peak of more than $80 billion. As a representative enterprise in the field of shared office, Wework’s valuation reached 47 billion US dollars in August last year.
However, after Uber’s IPO, its share price plummeted, while Wework’s IPO was stillborn, which also questioned the growth potential of aibiying.
Although the three sharing economies are typically based on asset light mode, Uber and Wework are based on local services, and the competitive environment is even worse. The service of aibiying based on global tourism is more unique and the competition barrier is relatively high.
Originally, aibiying planned to launch its IPO in March this year. Last year, aibiying was planning to go public. It launched a lot of advertising, increased marketing expenses, recruited staff and actively expanded its business scale.
However, the outbreak of the epidemic has brought about the most serious crisis since its establishment. In the first quarter of this year, the global order volume of aibiying declined rapidly.
According to the data released by airdna, a short-term rental market analysis website, from January to March this year, the Beijing reservation rate on the aibiying platform dropped by 96%. In March, the European market’s reservation rate fell by 80%. In the United States, New York, San Francisco, Seattle and other cities, the reservation rate decreased by 50%, while Washington, Chicago and other cities decreased by 35%.
The IPO plan can only be postponed, and the company has put its focus back on shared housing rental, cutting off hotels, luxury residential projects, transportation and entertainment businesses, and suspending other non core businesses, such as travel booking, restaurant booking, building rental and housing construction.
At the same time, the company also lowered its valuation to $26 billion. In April, investors valued the company at just $18 billion when it raised money to replenish cash.
However, thanks to the rapid control of the epidemic situation in China, the domestic order volume of aibiying has quickly rebounded. From March to August 2020, the number of new tenants of aibiying in China is the second in the world. After September, China has become the largest order market of aibiying.
Thanks to the contribution of the Chinese market, the company’s revenue in the first three quarters was $2.519 billion, down 31.89% year-on-year, much better than the 50% decline previously predicted by chetsky.
The company’s valuation has returned to more than $30 billion.
‘it may be difficult for us to make a profit,’ Mr. Abbey admitted in the prospectus. However, after telling investors about the promising future, aibiying is not only about where to live, but also from accommodation to travel. It claims that its total potential market value is $3.4 trillion, including $1.8 trillion of short-term travel market, $210 billion of long-term travel market and $1.4 trillion of experience economy.
Chesky also said in an interview that he felt the “high enthusiasm” of investors when he promoted aibiying in the roadshow.
Brian Cheski, Audemars Pigeut, welcome to WeChat official account.
As a result, aibiying raised its share price several times in the frequent roadshows before IPO, and finally set the issue price of $68 per share. And in the first day of listing, the market value once exceeded 100 billion US dollars, more than five times the valuation eight months ago.
The recent active US stock market has urged investors to push the market value of aibiying to a new height.
But James Gellert, chief executive of rapid rates, a financial analytics service, cautioned that sentiment could change quickly. At present, the long-term performance of aibiying is still full of uncertainty.
The plight of aibiying is not only due to the epidemic
“The epidemic and the actions taken to mitigate the pandemic have had a significant negative impact on the company’s business, results of operations and financial condition, and this impact will continue,” epeiying said
However, without the impact of the epidemic, aibiying is also faced with the dilemma of losses in successive years: in 2017, the net loss was $70 million, slightly improved in 2018, and the loss decreased to $16.86 million, but in 2019, the net loss increased significantly to $670 million.
The advantage of aibiying is that it does not own a house, but serves as a platform for exchanging information between the landlord and the tenant, and obtains the handling fee from it. In order to realize asset light operation, the most heavy employment cost of leasing real estate, decoration, management and service personnel in traditional hotel industry is removed.
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However, in order to establish cooperative relations with more landlords and attract consumption, the company’s expenditure on operation support, product development and sales cost in recent three years has exceeded 2.5-3 times of the cost of main business. The total cost of apeying in 2019 is as high as $5.3 billion, when board members have already asked executives: “your expenses exceed revenue growth, and you must control them.”
The reason why aibiying spends a lot of cost on marketing is mainly because it has encountered a bottleneck in the growth of residents. In 2010 and 2011, the growth rate of residents in aibiying reached a peak of 329% and 417%, and then declined in a few years, reaching 22% in 2019.
Due to the substantial increase in sales and marketing expenditure, the number of residents in aibiying in 2019 is 100000 more than that in the previous year. However, the pressure on profits will inevitably be increased by promoting growth through marketing.
A survey conducted by Morgan Stanley last year showed that the use of epimedium in the United States is declining. Last year, emarketer, a market research firm, also predicted that its market share would drop to 69.5% by 2023.
The emergence of the epidemic accelerated the decline. In May, Chesky said: “it took us 12 years to set up the ebyon business, but in four to six weeks we lost almost all of our business.” This made the outside world think that aibiying was going to go bankrupt.
Later Chesky explained that what he expressed was that the form of tourism would be completely changed. “The concept of travel as we know it is over, which does not mean that the tourism industry is over. No one knows what the future of travel will be like.”
Chessky found that the epidemic has caused a large number of people to work at home, creating a market for local tourism, and the business focus of aibiying has shifted from big cities with tourists to local accommodation.
Aiming at the short distance and fragmented tourism demand, aibiying has redesigned its web page and mobile phone applications. Let the algorithm show customers the nearby and convenient houses such as the cabin or seaside villa.
From April to July, the number of accommodation bookings on the aibiying platform increased steadily, from 8.7 million to 28.3 million.
But Chesky still has concerns, “we are definitely not out of danger. The market seems to be recovering, but it is likely to fall again. ” Chesky’s concerns soon followed, and bookings began to decline in August as new crown cases began to surge.
For the difficult to restore the cross-border tourism, aibiying is also in a more secure way to tap the tourism needs of customers. For this reason, aibiying launched online experience function to let participants “travel” around the world, but this part of the content deviated from the main business, and did not show a good growth.
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At present, the advantages of shared accommodation in the past, such as diversified accommodation environment, personalized service and its unique social attributes, have become defects in the epidemic situation.
On the contrary, the standardized brand hotels with more guaranteed disinfection and sanitary environment are more suitable for the post epidemic era. Although aibiying was still investing in the hotel chain brand Oyo last year to promote the hotel business, under the heavy load this year, aibiying has given up all business except B & B.
Although there is no epidemic situation, with the traditional tourism platform focusing on B & B services, the market share of Eby in the field of B & B has also been squeezed.
In 2018, booking took “other types of accommodation” as a separate category, and reported for the first time that the housing supply reached 5 million, which was equal to that of aibiying. If you add in the number of hotel rooms, the number of rooms in booking will exceed that of aibiying. In the fourth quarter of last year, the company’s revenue was $1.1 billion, a third of booking’s, according to the company.
As an important market for aibiying to resume its global business, China also has many competitors. According to the data of prospective industry research institute, from the comprehensive situation of housing resources, users and financing amount, Tujia, aibiying and Xiaozhu are in the first echelon of domestic shared accommodation industry, and Tujia is firmly in the first place. In 2020, Tujia will hold about 2.3 million houses in China, surpassing aibiying.
In spite of the difficulties, the capital is still optimistic about aibiying. The soaring market value also makes aibiying realize “counter attack”. Aibiying will have more sufficient funds to solve the problem. However, if you want to make the market value stable, aibiying still needs to show more brilliant performance.
(statement: This article only represents the author’s point of view, not Sina’s position.)