by David Forest
You know something’s wrong when even corporate CEOs say their share prices are too high.
That’s what happened during the massive Airbnb initial public offering (IPO) last December. Airbnb’s CEO Brian Chesky said simply, “I don’t know what else to say.”
Chesky was speechless after Airbnb’s share price more than doubled the day of the IPO. That gave the tech darling an improbable $100 billion market capitalization – for a company that makes zero profits, and doesn’t return a dime to shareholders.
The “price-to-book ratio” is a common metric used to determine whether a stock is overvalued or undervalued. In Airbnb’s case, the stock had a price-to-book ratio of 232x at the time of its IPO.