#70 - 12/09 Market Update, Airbnb IPO Growth Story, and Why SLACK Lost to MSFT Teams.
|Dec 9, 2020||2|
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.
Welcome back to the market of stocks!
The market continues to fly. The 4 major indices all closed at a new record high. Incredible.
The small-caps led and gained a cool 2%.
Energy was the strongest sector. $XLE closed above last week’s high. Utilities was the only sector in the red.
We got November's job numbers early this morning. The US added some gigs, but growth is stalling. See more below.
$SNOW 🥶 continues to pile up. The stock is up 46% in the last two weeks.
The FAANG gang rallied. The NY FAANG Index closed at an all-time weekly high.
Blackberry closed at its highest price since the summer of 2019. The company announced a partnership with AWS last week.
Reformed Millennial December IPO Slate Winners and Losers:
Airbnb - gold
Affirm - silver
Roblox - video games
Wish - 30b on 1b in revenue
🐣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.
Airbnb's good work over the last thirteen years has not been wiped out by covid-19, with the platform's enduring power demonstrated by robust acquisition, growth, and retention figures.
Despite slashing Sales & Marketing (S&M) spend by over 50%, from $1.2 billion over the first nine months of 2019 to $546 million over the same period in 2020, Airbnb's acquisition remained strong. Impressively, 91% of all traffic to the site came through direct or unpaid channels, supporting an organic growth story.
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🌊
The Reasonable Optimist- A realistic optimist is someone who knows that what happens in any given day, month, or year will be surprising, disappointing, difficult, and mostly out of your control. But they know with equal confidence that what happens in any given decade or generation is likely to be pretty good, bending heavily toward progress.
🤝Something about Slack (+ Salesforce) – I am sure that you have heard that Salesforce is buying Slack for a whopping $28 billion by now. And if you saw Marc Benioff in conversation with Bloomberg’s Emily Chang this morning, you could tell that Christmas came early for him and his company.
My 2 favorite business minds - Podcast/Stratechery
Twitter follow mentioned in the episode, Jack Butcher.
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