On Monday, Airbnb filed for an initial $1 billion public offering (IPO), which is expected to be priced in December.
Airbnb announced a net loss of almost $700 million on $2.5 billion in revenue for the first nine months of 2020, compared to a net loss of $322 million on $3.7 billion in revenue for the previous year. But it also reports sales of $219 million for the third quarter of 2020, as reservations rebounded.
The business of Airbnb deteriorated dramatically in early 2020 when COVID-19 disrupted travel across the world. But our business model started to recover even with restricted international travel within two months, showing its resilience. People wanted to get out of their homes and were willing to travel, but they didn’t want to go far or be in cramped hotel lobbies. Domestic travel quickly rebounded.
From venture capital and private equity funds, Airbnb raised around $6.4 billion. In the late 2017 round, it was estimated at $31 billion, but at just $18 billion when it secured an emergency equity and debt round in the early days of the pandemic.
Silver Lake, Sequoia Capital, Sixth Street, Founders Fund, Accel, DST Global and Greystar Real Estate are all major shareholders.
Through the end of September, the firm had about $4.5 billion in cash on its balance sheet.
Under the ticker symbol ABNB, Airbnb plans to list on the Nasdaq, with Morgan Stanley and Goldman Sachs as lead managers.
If Airbnb plans to raise about $1 billion is unknown, or whether that’s just a placeholder number that’s going to be more fleshed out in an amended filing.
Airbnb is expected to demonstrate its results over the past five years in IPO.
In 2017 and 2018, this will include profitability, but in 2019, a net loss.
In terms of segments, it is unknown how granular it will be for the 2020 results. But what we know is that with the pandemic, its cross-border market practically vanished, as did most of its urban apartment rental business. Suburban and rural rentals have been on the upside, with long-term bookings that were not a central offering previously.
This will be a standard IPO, not a “hybrid” that involves a direct listing of some kind. Airbnb considered the hybrid structure at least briefly, but was quickly turned off by what it thought would be an additional one to three months of regulatory testing.”
For early shareholders, there should be a small secondary piece, but acceptance was relatively light given the wider challenges in the hospitality sector.
To purchase shares, Airbnb “hosts” will not be granted cash incentives. This is partly for regulatory reasons, but more because Uber’s comparable (and laudable) attempt went so badly.
Instead, the organization is setting aside 9.2 million shares for an “endowment” planned to support hosts in fields such as education and financial disaster assistance. If those shares hit $1 billion in value, it becomes successful, with CEO Brian Chesky making an extra personal investment of shares valued at over $100 million.