IPO Fever: Airbnb and DoorDash Soar Amid Market Delusions

Strategic Insights -

Airbnb and DoorDash, two prominent startups, have made spectacular debuts on the stock market, leaving many to question their valuation and long-term sustainability. DoorDash's shares surged 85.7% in its first session, while Airbnb's stock more than doubled on its first day of trading. These performances have sparked concerns about a new IPO bubble, reminiscent of the internet bubble of 1999 and 2000.

Key Takeaways:

  • DoorDash's initial public offering (IPO) priced shares at $102, which started trading at $182 per share and closed at $189.51, giving the company a $70.3 billion market cap.
  • Airbnb's IPO priced shares at $68 per share, which opened at $146 and more than doubled the company's market cap to around $100 billion, close to the combined market cap of its top two competitors, Booking and Expedia.
  • David Trainer, CEO of market research firm New Constructs, has criticized DoorDash's IPO, calling it "the most ridiculous IPO of 2020," citing the company's high valuation, market share decline, and lack of long-term profitability.
  • Jay Ritter, a finance professor at the University of Florida, has expressed skepticism about the current IPO market, stating it is "not as crazy as in 1999 and 2000, but still crazier than any other intervening years."
  • The IPO market's current state has been compared to the internet bubble of 1999 and 2000, with many warning about the potential consequences of overvaluation and market delusions.

Statistics:

  • DoorDash's market cap: $70.3 billion
  • Airbnb's market cap: around $100 billion
  • Booking's market cap: $86.2 billion
  • Expedia's market cap: $18.4 billion
  • Marriott's market cap: $42.7 billion
  • Hilton's market cap: $29.7 billion
  • Uber's price-to-sales ratio: around 8
  • DoorDash's price-to-revenue ratio: over 16
  • General Motors' market cap: $61.3 billion

Sources:

  • Bloomberg
  • Investing.com
  • The Federal Trade Commission (FTC) report on Facebook's antitrust suits
  • Pfizer's vaccine news release