With Airbnb boosting the pricing range for its hotly anticipated IPO this week, we decided to take a look at how Wall Street sees the broader travel recovery. For a more in-depth “how to” start your work on the Airbnb IPO, see how we redlined the original S-1 even though some might think that there are no prior versions of the filing.
Revenue outlook for the cruise lines and theme/destination parks: a 2022 affair
For the major cruise lines (RCL, CCL, NCLH) and destination-type operators, like Six Flags, SeaWorld, and Cedar Fair, the recovery is a 2022 (and later) affair. You can see how we used our NLP technology to parse through the Six Flags call during the worst of the crisis.
Equity issuance and government help have taken deeply negative scenarios off the table: the market is over covid
While travel stocks have borne the brunt of covid, on the positive side, we have seen multiple financing transactions, including debt, equity, and asset sales (the airline loyalty programs being among the more interesting deals: see how we collected US airline industry cash burn data in 60 seconds, and our NLP Heatmaps applied on the airlines). But the financings’ success has also led to an interesting phenomenon that we have observed with retail investors: the stock price of “X” is still down Y%… however, in real terms, market capitalization and enterprise value are much closer to the pre-covid highs because of the new equity and debt issuance. We can see this effect very clearly in CCL (below) where the market capitalization (in red) is much closer to a recovery than the price of an individual share.
Adding the enterprise value for CCL on the chart, we can see that, on EV basis, the market is looking well-beyond covid (note that market capitalization and EV are on different axes). This is partially why the Airbnb IPO is not merely “anticipated” but “hotly anticipated.”
Airlines: “everything” is uneven
While the TSA passenger counts have been showing a slow but steady recovery into Thanksgiving, we continue to see a mix of positive and negative metrics coming from the industry.
Just after the US holiday, American Airlines filed an 8-K that the company expects its Q4 average daily cash burn to come in at the high end of the previously forecasted range.
We are also seeing a very wide range of reported Load Factors across the industry (the two rightmost columns in the screenshot). While the range for our watchlist was just 80.6%-86.6% for the last fiscal year, in the last quarter, the range is considerably wider, from a low of 25.9% for Hawaiian to a high of 68.1% for Spirit (and both are leisure-heavy airlines: the “lower 48” travel bounce is good for Airbnb).
Most airline KPIs are “off the lows” but well under pre-covid levels. We can see this very clearly when we use our Machine Learning-based Table Explorer to chain JetBlue’s KPIs from their SEC filings. When viewed on a quarter-over-quarter basis, we see triple-digit percentage increases in metrics like revenue passengers and revenue passenger miles.
Switching the exact same KPI table chain to year-over-year change, the Q3 “bounce” looks underwhelming.
(To learn more about our table identification, chaining and visualization tool Table Explorer, watch this introductory video).
Hotels: also looking past 2021
Looking at lodging- the direct comps of Airbnb- we can also see the market looking past 2021, similar to the cruise lines dynamic, discussed above. Using Hilton as a prominent example, we can see that the 2021 EPS estimates have stayed down over 50% versus the pre-covid levels while the stock price has recovered almost fully.
This is very similar to what we see going on with the estimates for other hotel names, like Wyndham: 2022 is almost unchanged (screenshot with Revenue estimates from our Equity Data Terminal (recent on-demand webinar open to all)).
In aggregate, we see Wall Street analysts and investors looking past 2021 for the travel recovery, so we expect a strong showing for Airbnb, a secular growth player where 2020/2021 will not matter much.