Airbnb's Shares Jumped On Its Stock Market Debut And The US Government Sued Facebook

Airbnb's Shares Jumped On Its Stock Market Debut And The US Government Sued Facebook

about 3 years ago3 mins

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Airbnb finally moved onto the stock market on Thursday, and investors loved what the house-sharing company had done with the place: its shares initially more than doubled 🏡

What does this mean?

It almost goes without saying that pandemic-stalled travel has made life difficult for Airbnb, but the company surprised everyone last quarter by actually turning a profit, thanks to now-in-vogue “staycations”. Throw in the fact that some of its employees’ options were set to expire by the end of the year – which would leave their hard-earned stakes in the business worthless – and Airbnb thought it was about time it sold its shares to the public.

And boy did those shares sell: Airbnb raised $3.4 billion from its initial public offering (IPO), setting the overall company valuation at $47 billion 💰 That’s not just one of the biggest US IPOs of the year, it also marks a massive step up from the $18 billion the firm was valued at in April.

Airbnb valuation

Why should I care?

For markets: Confidence boost.

Airbnb upped its starting share price twice ahead of its stock market debut, which is a sign that investors are confident both in the company itself and in the travel industry’s eventual recovery 🌎 That confidence could now spill over into other travel companies like Booking.com and Expedia – especially since their shares are looking cheaper than Airbnb’s.

The bigger picture: There’s nowhere to hide.

The sharing economy is facing more scrutiny these days: the UK government, for one, announced on Wednesday it’s going to start being stricter about taxing Airbnb’s landlords 💷 They’re not employed by the company itself and don’t earn enough to incur the government’s “value-added tax”, which means anyone booking with them avoids paying an extra 20% on the basic fee. Now, though, that extra income sure could come in handy for a country with a $500 billion-shaped hole in its budget this year…

OBR forecasts show that the economy will contract by 11.3% this year, the biggest decline in three centuries

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The US Government Sued Facebook

Facebook image

Facebook’s relationship with the US got a lot more complicated on Wednesday, after the country filed lawsuits pushing the social network to break up once and for all 🇺🇸

What does this mean?

In two separate lawsuits, the antitrust regulator and almost every US state alleged that Facebook has a monopoly in the social networking market. They’re claiming the company has either bought or tried to buy smaller firms in a bid to snuff out potential competitors before they get a chance to live up to that potential 💵 More specifically, they’re targeting two of Facebook’s major acquisitions – Instagram and WhatsApp – in hopes they can force the company to unwind them altogether.

Facebook, for its part, invoked the long-established “no takey-backsies” principle: the company pointed out that both acquisitions were investigated and approved in 2012 and 2014 respectively by the very same regulators suing them, and that this whole thing is just an unnecessary excuse for a do-over.

Facebook ad revenues in the US

Why should I care?

For markets: Firing blanks.

Investigations and lawsuits into Big Tech’s dominance are launching left, right, and center these days, but this lawsuit makes Facebook the first of the bunch to be hit with a breakup order 💔 Investors might want to keep things in perspective, though: if the previous notable attempt by lawmakers to break up a company – the US vs. Microsoft in 1998 – is anything to go by, it’ll be a very slow process with a very anticlimactic ending.

The bigger picture: Accept no imitations.

The lawsuit from America’s various states also focuses on Facebook’s data collection efforts, alleging the company is able do what it likes with users’ data as long as they have no better alternative 🔎 And because Facebook has so much of that data at its fingertips, it’ll be able to keep building a customised experience other platforms just can’t copy – keeping them out of the loop for good.

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