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Airbnb: I Like Big TAMs and I Cannot Lie
An article by • Published Dec 11, 2020

I Like Big TAMs And I Cannot Lie

Airbnb, Inc. $ABNB went public this week, with the market cap quickly zooming to $100 billion +/-
Investors are looking past recent COVID-19 related weakness toward future growth and a TAM the company disclosed at $3.4 trillion
Gross Booking Value in 2019 was $38 billion, +29%
ABNB currently has 4 million hosts and 5.6 million active listings, 86% of hosts are outside the U.S.

We have a substantial market opportunity in the growing travel market and experience economy. We estimate our serviceable addressable market (“SAM”) today to be $1.5 trillion, including $1.2 trillion for short-term stays and $239 billion for experiences. We estimate our total addressable market (“TAM”) to be $3.4 trillion, including $1.8 trillion for short-term stays, $210 billion for long-term stays, and $1.4 trillion for experiences.

The ABNB financial model can be deconstructed into simple KPIs

Nights Booked x $/Night = Gross Bookings Value Gross Bookings Value x Take-Rate = ABNB Revenue ABNB Revenue x FCF Margin = FCF
For context, the current trailing run-rate for quarterly nights is 56 million, down from 82 million at 4Q19

The table below should be read as follows and ties to data from the charts below: - QTR Nights x 4 x $/Night = Gross Bookings Value (GBV) - GBV x Take-Rate = ABNB Revenue - ABNB Revenue x FCF Margin = ABNB FCF ** Take-Rate and FCF Margin are assumed LT goals
Quarterly nights and experiences booked were trending toward 100 million
Gross bookings value can be utilized to back into gross $ per night/experience
Per night gross revenue is currently approximately $115 to $130
Long-term take-rate of 15% is probably in the ballpark of what the company will shoot for
FCF margin was coming in before the pandemic hit, but
indicates there isn't a high capex burden on the business, as one would expect in a software-driven marketplace
20-25% FCF margins are likely a good LT goal
With a $3.4 trillion stated size of TAM, ABNB will likely trade on potential growth for some time. As shown here, backing into potential forward revenue and FCF may be as simple as following just a few KPIs - nights booked, room rates, take rates and FCF margins.