Home-sharing start-up Airbnb plans to join the US stock market in 2020. The news broke just days after WeWork, the office space sharing business, was forced to delay its own stock market plans after struggling to convince investors of its long-term profitability and corporate governance issues.

Airbnb looks a much more attractive investment proposition to us than WeWork. Its business model is fairly simple: it provides a platform for people to book a stay in someone else’s home.

It claims to have 7m listings in over 100,000 cities worldwide, with 8.2m guests staying in Airbnb-listed properties in the year to 31 July 2019.

The company was last valued at $31bn in September 2017 and while limited financial data is available, analysts believe the company will look for a market valuation of between $38bn and $50bn.

‘Airbnb has a really scalable business model and, frankly, if it prices its IPO (initial public offering) realistically I would expect it to be well received,’ says Richard Holway, founder of the TechMarketView website.

The company was founded in 2008 by chief executive Brian Chesky, along with two roommates. The trio started the business by renting air mattresses in a room in San Francisco and it has grown rapidly, raising around $4.4bn of growth funding from backers, including Amazon’s founder Jeff Bezos.

Airbnb owns no property and simply acts as a broker between traveller and property owner. It also manages payments, acts as a mediator in the case of grievances, and lists reviews of both hosts and travellers.

This asset-light model gives the company far more flexibility over large hotels chains with vast property estates to run and fund.

Airbnb generated more than $1bn revenue in its most recent quarter and has made more than $80bn for Airbnb hosts since its launch 11 years ago. Although no profit figures were disclosed all previous announcements have indicated that Airbnb was profitable in both 2017 and 2018.

Diversifying and expanding its platform and revenue streams has included complementary travel services, allowing guests to book local tours, cooking classes, and other cultural immersion activities through its platform.

Plans also include a loyalty programme, attracting higher quality places to stay, and creating a corporate travel business. It also wants to break into China.

Regulation remains a risk. Airbnb has faced criticism of feeding over-tourism in some destinations, pushing up rents beyond the reach of local residents. The company has also mulled starting its own airline, which would represent a huge departure from its current business model.

We need more detailed data to form a proper opinion on the investment case, but at this early stage Airbnb looks a lot more enticing than some of the headline grabbling stock market flotations this year, such as Uber and Lyft, which have both flopped.

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