Startup Valuation: A Share Price Assessment of Airbnb

This paper is divided into two parts, a literature review, and a case study on Airbnb. The first section exhaustively describes startups, considering the different stages they experience throughout their first years and the forms of financing they have. Next, twelve valuation methods are evaluated,...

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Detalles Bibliográficos
Autor: Marino Sanjurjo, Gabriel
Tipo de recurso: tesis de maestría
Fecha de publicación:2022
País:España
Institución:Universitat Politècnica de Catalunya (UPC)
Repositorio:UPCommons. Portal del coneixement obert de la UPC
Idioma:inglés
OAI Identifier:oai:upcommons.upc.edu:2117/374260
Acceso en línea:https://hdl.handle.net/2117/374260
Access Level:acceso abierto
Palabra clave:New business enterprises
Business--Technological innovations
Creative ability in business
Empreses--Creació
Negocis--Innovacions tecnològiques
Creativitat en els negocis
Àrees temàtiques de la UPC::Economia i organització d'empreses
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spelling Startup Valuation: A Share Price Assessment of AirbnbMarino Sanjurjo, GabrielNew business enterprisesBusiness--Technological innovationsCreative ability in businessEmpreses--CreacióNegocis--Innovacions tecnològiquesCreativitat en els negocisÀrees temàtiques de la UPC::Economia i organització d'empresesThis paper is divided into two parts, a literature review, and a case study on Airbnb. The first section exhaustively describes startups, considering the different stages they experience throughout their first years and the forms of financing they have. Next, twelve valuation methods are evaluated, divided into six traditional and six alternative methods for startups. Finally, in order to adapt the study to aspects that are beyond the intrinsic characteristics of the company, it is important to take into account macroeconomic facets such as interest rates, which are directly related to the valuation of startups. This is what is being seen in the current situation, that a high inflation has resulted in a pronounced rise in interest rates, causing the valuation of companies to plummet, as investors have less incentive to risk their capital with less predictable ventures instead of lending it at high rates, and founders find it more expensive to borrow money from banks, making them more dependent on investors. The second section begins with a qualitative assessment of Airbnb, with both a company and an industry overview, and it is followed by the company valuation using the methods analyzed before. The study suggests a share price range between $170.0 and $185.0, which is above the market price at the time of the valuation, on April 30, 2022, valuing the company’s stock at $159.7. These results indicate that Airbnb stock is slightly underpriced in the market, probably due to the still uncertain COVID-19 future outcome. In addition, it is shown that the price of $68 per share in the IPO was particularly low, a fact that could already be seen on the same day when the price was adjusted to $146 before starting to trade. Thus, the price with which Airbnb started on the stock market is also justified, having been a success for its first shareholders. Finally, from this analysis can be seen the great complexity when valuing a startup given the variability of the results obtained in the study. In the case of Airbnb, which has some characteristics of startups and others of a mature company, it is especially important to combine both traditional and alternative methods to try to assess this characteristic with maximum precision. The most reliable methods for this case study are those that consider longer-term forecasts since the effects of the pandemic are minimized, in particular the DCF, the LBO, the Venture Capital, and the First Chicago approaches.Universitat Politècnica de CatalunyaWunnik, Lucas Philippe van20222022-10-1120222022-10-11master thesishttp://purl.org/coar/resource_type/c_bdccNAhttp://purl.org/coar/version/c_be7fb7dd8ff6fe43info:eu-repo/semantics/masterThesisapplication/pdfhttps://hdl.handle.net/2117/374260reponame:UPCommons. Portal del coneixement obert de la UPCinstname:Universitat Politècnica de Catalunya (UPC)Inglésengopen accesshttp://purl.org/coar/access_right/c_abf2info:eu-repo/semantics/openAccessoai:upcommons.upc.edu:2117/3742602026-05-27T15:37:01Z
dc.title.none.fl_str_mv Startup Valuation: A Share Price Assessment of Airbnb
title Startup Valuation: A Share Price Assessment of Airbnb
spellingShingle Startup Valuation: A Share Price Assessment of Airbnb
Marino Sanjurjo, Gabriel
New business enterprises
Business--Technological innovations
Creative ability in business
Empreses--Creació
Negocis--Innovacions tecnològiques
Creativitat en els negocis
Àrees temàtiques de la UPC::Economia i organització d'empreses
title_short Startup Valuation: A Share Price Assessment of Airbnb
title_full Startup Valuation: A Share Price Assessment of Airbnb
title_fullStr Startup Valuation: A Share Price Assessment of Airbnb
title_full_unstemmed Startup Valuation: A Share Price Assessment of Airbnb
title_sort Startup Valuation: A Share Price Assessment of Airbnb
dc.creator.none.fl_str_mv Marino Sanjurjo, Gabriel
author Marino Sanjurjo, Gabriel
author_facet Marino Sanjurjo, Gabriel
author_role author
dc.contributor.none.fl_str_mv Wunnik, Lucas Philippe van
dc.subject.none.fl_str_mv New business enterprises
Business--Technological innovations
Creative ability in business
Empreses--Creació
Negocis--Innovacions tecnològiques
Creativitat en els negocis
Àrees temàtiques de la UPC::Economia i organització d'empreses
topic New business enterprises
Business--Technological innovations
Creative ability in business
Empreses--Creació
Negocis--Innovacions tecnològiques
Creativitat en els negocis
Àrees temàtiques de la UPC::Economia i organització d'empreses
description This paper is divided into two parts, a literature review, and a case study on Airbnb. The first section exhaustively describes startups, considering the different stages they experience throughout their first years and the forms of financing they have. Next, twelve valuation methods are evaluated, divided into six traditional and six alternative methods for startups. Finally, in order to adapt the study to aspects that are beyond the intrinsic characteristics of the company, it is important to take into account macroeconomic facets such as interest rates, which are directly related to the valuation of startups. This is what is being seen in the current situation, that a high inflation has resulted in a pronounced rise in interest rates, causing the valuation of companies to plummet, as investors have less incentive to risk their capital with less predictable ventures instead of lending it at high rates, and founders find it more expensive to borrow money from banks, making them more dependent on investors. The second section begins with a qualitative assessment of Airbnb, with both a company and an industry overview, and it is followed by the company valuation using the methods analyzed before. The study suggests a share price range between $170.0 and $185.0, which is above the market price at the time of the valuation, on April 30, 2022, valuing the company’s stock at $159.7. These results indicate that Airbnb stock is slightly underpriced in the market, probably due to the still uncertain COVID-19 future outcome. In addition, it is shown that the price of $68 per share in the IPO was particularly low, a fact that could already be seen on the same day when the price was adjusted to $146 before starting to trade. Thus, the price with which Airbnb started on the stock market is also justified, having been a success for its first shareholders. Finally, from this analysis can be seen the great complexity when valuing a startup given the variability of the results obtained in the study. In the case of Airbnb, which has some characteristics of startups and others of a mature company, it is especially important to combine both traditional and alternative methods to try to assess this characteristic with maximum precision. The most reliable methods for this case study are those that consider longer-term forecasts since the effects of the pandemic are minimized, in particular the DCF, the LBO, the Venture Capital, and the First Chicago approaches.
publishDate 2022
dc.date.none.fl_str_mv 2022
2022-10-11
2022
2022-10-11
dc.type.none.fl_str_mv master thesis
http://purl.org/coar/resource_type/c_bdcc
NA
http://purl.org/coar/version/c_be7fb7dd8ff6fe43
dc.type.openaire.fl_str_mv info:eu-repo/semantics/masterThesis
format masterThesis
dc.identifier.none.fl_str_mv https://hdl.handle.net/2117/374260
url https://hdl.handle.net/2117/374260
dc.language.none.fl_str_mv Inglés
eng
language_invalid_str_mv Inglés
language eng
dc.rights.none.fl_str_mv open access
http://purl.org/coar/access_right/c_abf2
dc.rights.openaire.fl_str_mv info:eu-repo/semantics/openAccess
rights_invalid_str_mv open access
http://purl.org/coar/access_right/c_abf2
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Universitat Politècnica de Catalunya
publisher.none.fl_str_mv Universitat Politècnica de Catalunya
dc.source.none.fl_str_mv reponame:UPCommons. Portal del coneixement obert de la UPC
instname:Universitat Politècnica de Catalunya (UPC)
instname_str Universitat Politècnica de Catalunya (UPC)
reponame_str UPCommons. Portal del coneixement obert de la UPC
collection UPCommons. Portal del coneixement obert de la UPC
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