Wall Street bets on solid revenue growth for Airbnb and DoorDash

Jan. 4 (Reuters) – A large number of brokerage firms launched coverage of Airbnb Inc (ABNB.O) and DoorDash Inc (DASH.N) on Monday, with high hopes for their revenue growth and supporting the Staggering valuations obtained by the two last month in stock market launches.

Home rental company Airbnb was valued at just over $ 100 billion when it debuted in the largest U.S. initial public offering (IPO) of 2020, while delivery company from DoorDash food was valued at more than four times its value in a previous fundraiser. . Read more

IPOs have boosted investor appetite for tech companies, both of which are app-based, and analysts predict steady growth as travel restrictions ease and the global food delivery industry continues. to develop oneself.

More than 25 brokerage firms have launched coverage on the two companies. Banks that worked on the IPOs of the two companies had been required by industry practice to refrain from launching a hedge until Monday.

Morgan Stanley, Goldman Sachs, BofA and others led an underwriting group of 37 companies for the Airbnb IPO, while Goldman Sachs and JP Morgan led a syndicate of 12 companies on the DoorDash offer .

Credit Suisse expects the behavioral changes brought on by the pandemic to accelerate the shift from hotels to alternative accommodation and analysts see plenty of opportunities for Airbnb to increase monetization over the long term.

Jefferies analysts expect a return to 2019 bookings and revenue levels by the second half of 2021 and double-digit growth through 2025, with annual profits expected by 2022.

Airbnb’s revenue fell 18% in the third quarter of 2020, but it made a profit, mainly helped by cost cuts.

Piper Sandler analysts were also bullish on DoorDash.

“We believe DoorDash has a chance of achieving ‘super app’ status in the home delivery market, with a better business model (in our opinion) than Uber’s, ranked neutral (UBER.N) “Piper Sandler analysts said.

TEMPERATE EXPECTATIONS

BofA analysts, however, have expressed concern over Airbnb’s valuation.

“We see Airbnb’s valuation (relative to its peers) as the biggest stock market concern given that Airbnb services are not new (…) and that the competitors Booking and VRBO occupy solid positions in their markets. “domestic”, “analysts said.

BofA also said DoorDash’s premium multiples were justified given its larger scale and market share gains, but warned of slowing growth that puts pressure on valuation in 2021.

Brokerages not involved in the IPOs had previously lowered stocks, based on their valuations, with Citron Research saying the DoorDash IPO “was the most ridiculous IPO of 2020.”

Airbnb shares were down 3.1% on the Nasdaq, while DoorDash shares were down 2.45% on the New York Stock Exchange.

Report by Noor Zainab Hussain in Bangalore; Edited by Bernard Orr

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