First we heard the rumors about HomeAway’s IPO, then in March of this year they finally went public with their decision. Now, it looks like HomeAway shares will be offered as early as tomorrow (Wednesday). Last week their shares were expected to be priced somewhere between $24 and $27.
So, how do market experts view HomeAway’s entry on the stock market? We have done some research on various stock market publications, and the general feeling is that HomeAway should be able to do well.
Tom Taulli at Forbes says HomeAway should be well received by investors due to a few things; one of them being HomeAway’s solid business model. HomeAway receives about 90% of its revenue from charging annual subscriptions to property owners, with an average amount of $300. HomeAway also receives revenue by offering value-add services, such as credit card/check acceptance, property damage protection and so on. Another thing that HomeAway does well is provide their users with lot of tools to help them in their business, such as online forums, seminars, newsletters, and even in-person events. These kinds of efforts are crucial for maintaining renewal rates and to make sure money keep coming in. Overall, Tom Taulli believes HomeAway will perform well on the stock market.
The Wall Street Journal points at other travel companies, such as India travel site MakeMyTrip Ltd. And Kayak Software Corp., who both have had successful IPO’s. However, they do warn about the weak economy and how that can affect they travel industry as a whole, but at the same time claim that HomeAway will be in good shape since more people will be looking at more affordable vacation solutions, and vacation rentals being one of them.
Investors.com has asked Stephanie Chang, an analyst with IPO investment firm Renaissance Capital, and she also believes HomeAway will be well received by investors due to the fact that HomeAway is a fast growing company, and operates in a growing industry. Also, HomeAway’s global reach is something that should help the company in attracting investors. Investors.com also point out that HomeAway’s revenue is highly seasonal with the spring and summer quarter bringing in most of the money. If this is a good or bad thing is unclear, but so far HomeAway has been able to bring in more revenue for each year.
There is some concern that with about a 25% owner loss rate per year, that they have a steep climb to become more profitable especially considering much of their growth has been through acquisitions of other portals and that low hanging fruit is now part of the HomeAway brand.
HomeAway plans to raise $204 million by offering 8 million shares. Barefoot Technology links its clients to the HomeAway brands and many other independent portals. Barefoot Agent 3.c has the largest independent and flexible portal program in the industry. When HomeAway purchased two of our floundering competitors they went into competition in the same market place, but really are not in our niche. While concerned of the competition and how VRBO will affect professionally managed agencies, we are excited that HomeAway is going public and thus bringing huge press to the vacation rentals industry.
Our suggestion is buy a share, that way you become an owner and get all the information and can speak at stock holder meetings.