After HomeAway, fewer options to bet directly on sharing economy

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By Noel Randewich

SAN FRANCISCO, Nov 6 (Reuters) - It (Other OTC: ITGL - news) is about to get even

harder for stock market investors to make direct bets on the

small but fast-growing sharing economy that has gained attention

from the runaway success of Uber and Airbnb.

Expedia (NasdaqGS: EXPE - news) 's deal to buy vacation rental site HomeAway

Inc (LSE: 0M50.L - news) for about $3.9 billion, unveiled Wednesday, will

shorten an already modest list of publicly-traded companies

focused on peer-to-peer home rentals, ride-hailing services and

other ways for people to make money from their personal

property.

It is a sector that could earn $335 billion in annual

revenue over the next decade, estimates PriceWaterHouseCoopers,

and present opportunities for investors, according to Credit

Suisse.

But many of the smallish firms currently trading in that

space on U.S (Other OTC: UBGXF - news) . exchanges have not performed as well as HomeAway (NasdaqGS: AWAY - news) ,

up almost 20 percent since the deal with Expedia was unveiled.

Peer-to-peer finance company LendingClub (Berlin: 8LC.BE - news) has fallen

43 percent year to date and is just below its 2014 initial

public offering price. Textbook renter Chegg (NYSE: CHGG - news) is up 9

percent this year but remains 39 percent below its lofty 2013

IPO price.

With a combined market capitalization of just $10 billion,

those companies and HomeAway are dwarfed by sharing economy

heavyweight Uber, whose most recent round of funding valued it

at over $50 billion, and Airbnb, valued around $25 billion.

"If you're looking for a public company related to the

sharing economy, there's nobody else doing it at this scale,"

said Cantor Fitzgerald analyst Naved Khan.

Uber CEO Travis Kalanick recently said his company was years

from an IPO. Airbnb has been quiet on its plans go public and in

June raised $1.5 billion in fresh funds, suggesting it is in no

hurry.

Credit Suisse (LSE: 0QP5.L - news) 's equities research group in a recent report

listed LendingClub, TripAdvisor (NasdaqGS: TRIP - news) , United Kingdom-listed

Regus (Other OTC: RGSJF - news) and car rental agencies Avis Budget (NasdaqGS: CAR - news) and Hertz

among stocks poised to benefit from the sharing economy.

Regus, which since the 1980s has offered temporary

offices and meeting rooms, has surged 61 percent this year.

JCDecaux (Paris: FR0000077919 - news) , an advertising company that operates public

bike-share systems across Europe, has jumped 28 percent.

None are bargain priced, however. LendingClub now trades

around 66 times expected earnings and Chegg at 47 times earnings

making both more expensive than HomeAway at 46 times earnings.

Compass Point Research analyst Michael Tarkan recommends

selling LendingClub's stock because of competitive risks and

regulatory uncertainty related to its use of a third-party bank

to make loans, which it then buys and sells to investors.

Chegg, which started as a textbook rental service and is

transitioning to a digital business as well as connecting tutors

with students, has yet to see its stock reach its IPO price.

That underscores the importance of carefully weighing

valuations, even if only a handful of sharing-economy stocks are

available to investors.

"Beware buying new offerings of 'sharing economy'

powerhouses if they come public during a period of market

exuberance. They will likely be overpriced," wrote Guild

Investment Management executive vice president Tim Shirata in a

note to clients on Thursday. "Wait for a significant correction

before you invest."

(Reporting by Noel Randewich, additional reporting by Jeffrey

Dastin in New York; Editing by Linda Stern and Andrew Hay)