Now, market experts are wondering if Airbnb, the red-hot home sharing company that is currently valued at $35 billion, can change the story for unicorns.
Airbnb has a lot going for it that could make it a better stock than other unicorns. For one, CEO Brian Chesky is highly respected and hasn’t made any headlines for establishing a wacky corporate culture like WeWork, or Uber when Travis Kalanick was in charge.
The company also has a deeper management bench that is ready to handle the rigors of being a public company.
At Airbnb, Stephenson joined another prominent Amazon alumnus — Greg Greeley, who ran the Prime subscription service before becoming Airbnb’s president of homes in March 2018
The company recently reported revenue of more than $1 billion for the second quarter, and has reportedly generated positive earnings before interest, taxes, depreciation and amortization (EBITDA).
In theory, that puts Airbnb closer to an actual profit, and the possiblity that it could have a successful offering next year.
That would be a big leap over recent offerings.
“WeWork’s planned IPO turned into a highly publicized debacle that suggested public investors may finally be done overpaying for blazing-fast growth,” said analysts at Renaissance Capital, a firm that specializes in IPO research and manages two IPO ETFs, in a report.
Katie Nixon, chief investment officer with Northern Trust Wealth Management, said in a report that the IPO market’s recent problems reflect “a renewed and rational lack of exuberance for high valuations in venture capital, and highlights that investors are still paying attention to fundamentals.”
“We’re not seeing the IPO window closed yet but the market is finicky. There may be more direct listings, but it will take companies with a strong profile like Airbnb to do them,” said Michael Lin, director of accounting & transaction services at MorganFranklin Consulting.
Unicorn meltdown but don’t count out all IPOs
Investors may be shunning mega-unicorns like Uber and Slack but they have flocked to companies in hot sectors such as cloud security and software.
John Mullins, an associate professor of management practice in marketing and entrepreneurship at London Business School, said he remains optimistic about Airbnb’s chances for success, because of its market-leading position and stronger financial position.
Still, some experts think investors should remain extremely cautious when investing in startups.
“We are seeing a beginning of a correction, a back-to-sanity moment,” said Megan Bent, managing partner at venture capital firm Harbinger Ventures. “Vision alone is not enough to overcome weakness on the bottom line — and revenue growth alone can’t overcome weak corporate governance.”
Bent said her firm has eschewed hot tech unicorns in favor of smaller, private consumer products makers, such as tampon maker Cora, subscription wine service Usual Wines and organic baby food company Once Upon a Farm, which was co-founded by actress Jennifer Garner.
Dev Kantesaria, founder and portfolio manager of Valley Forge Capital Management, said that he, too, believes investors shouldn’t chase high-profile Silicon Valley unicorns when there are plenty of profitable market leaders out there.