#70 - 12/09 Market Update, Airbnb IPO Growth Story, and Why SLACK Lost to MSFT Teams.

  
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In this week's episode of Reformed Millennials, we're talking at length about the Airbnb IPO where we dive into the perceived pros and cons of the companies future prospects. Also, we discuss one of Canada’s Darling companies, Slack, and reminisce about our first podcast episode back in august 2019 where we talked about these burgeoning WFH companies and lastly, we discuss a couple of WFH trends that are likely to stick around after the Vaccine.

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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.

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📈📊Market UPDATE💵📉

Welcome back to the market of stocks!

The market continues to fly. The 4 major indices all closed at a new record high. Incredible. 


🐣Airbnb s-1 and some Quick Hits🐥

Bludgeoned by the coronavirus, the hospitality platform has spent much of 2020 in a state of crisis, raising debt and cutting budgets. In the process, management demonstrated trademark resilience in the face of adversity, artistry amid disaster.

Thirteen years after inception, Airbnb is, like the rest of the world, in flux. Revenue totaled $2.5 billion over the first nine months of 2020, down 32% year-over-year. Operating margins took a hit, too. But with vaccine trials looking promising, better days may be around the corner. Winners of the IPO include Sequoia Capital and Founders Fund.

The Good:

The Bad:

  • With travel decimated, Airbnb had little option other than to raise $2 billion in debt and equity from Sixth Street and Silver Lake, as mentioned.

  • Before the outbreak, revenue growth had slowed to 32%. While that still supported a long-term expansion story, it read as a disappointment to some, given Airbnb's relatively low penetration across its $3.4 trillion TAM. . Parsing this momentum is made more difficult because the S-1 provides little detail on different customer types, such as those leveraging the platform for corporate travel.

  • Airbnb's operating leverage is relatively high. Operating leverage reflects the relationship between revenue and operating income — a company with high operating leverage increases its profits as revenue grows. This is because said company's fixed costs are higher than its variable costs and make up a proportionally smaller percentage of sales during periods of growth.

🚀CRM Buys Slack🌍

Salesforce.com Inc. agreed to buy messaging company Slack Technologies Inc. in a $27.7 billion deal that shows how the biggest players in cloud computing are racing to add muscle amid the pandemic’s remote-work boom

Slack: this acquisition was about removing risk, and locking in a $27.7 billion exit, a 42% premium over the company’s $19.5 billion valuations after its 2019 direct listing. That’s not too shabby in a vacuum, but a whole lot less impressive in comparison to Microsoft — which owns Teams, Slack’s most direct competitor from a product perspective — which is up 58% over the same time period, much less Zoom — Slack’s peer in terms of age and product portfolio size — which is up 304%, even after its recent slide

why Teams beat Slack:

  • It was “free” (i.e. bundled with Office 365)

  • It leveraged Microsoft’s sales channel

  • It was a better product by virtue of its integration

🌊Best Links of The Week🌊

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