San Francisco-based Airbnb continues to feel the effects of the COVID-19 pandemic as it files its initial public offering.
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Airbnb Inc. filed for an IPO on Monday, becoming the latest big name to join the push to go public despite the COVID-19 pandemic.
Global online rental market activity has been and continues to be severely impacted by the coronavirus pandemic. Although it is beginning to make a comeback as it adapts to the new realities of limited travel for business and pleasure, Airbnb ABNB
lost more money in the first nine months of this year than it lost all of last year. Its gross booking value was down nearly 40% and its revenue was down more than 30% year over year.
But in testament to what Airbnb calls its resilient business model – combined with a major cost reduction brought on by the pandemic when it first hit – the San Francisco-based company posted a profit of 219 million in the third quarter on revenue of $1.34 billion. Still, he warned of lingering challenges, citing tough new lockdowns in Europe.
“Similar to the impact of the initial wave of COVID-19 in March 2020, we are seeing a decline in bookings in the most affected regions,” Airbnb said in its prospectus.
Airbnb plans to list its shares on the Nasdaq Global Select Market under the symbol ABNB, and the listing will be led by Morgan Stanley and Goldman Sachs, two of the 35 underwriters listed in the prospectus. The company has declared a target of $1 billion for the IPO, although this is usually a fictitious amount on an initial deposit that will be updated later in the process. The goal, however, suggests high ambitions, as the standard placeholder is $100 million.
Airbnb, born because two of its co-founders took advantage of a 2007 international design conference in San Francisco and offered air mattresses in their apartment to cover their rent, now has more than 4 million hosts who rent out everything from a spare bedroom to empty mansions. The company has served more than 825 million customers in 220 countries and regions, according to its filing.
The company lists many competitors, including online travel agencies like Expedia Group EXPE,
search engines such as Alphabet’s GOOGL,
Google and Baidu BIDU,
ad providers like Craigslist and hotel chains like Marriott International Inc. MAR,
Hilton HLT,
and more.
In the nine months ended Sept. 30, the company’s gross book value was $18 billion, down 39% year-over-year, on revenue of $2.5 billion. dollars, down 32% from the prior year period. Last year, Airbnb’s gross booking value was $38 billion, a 29% increase from $29.4 billion in 2018. Its revenue in 2019 grew to 4, $8 billion, up 32% from $3.7 billion in 2018.
In the first nine months of this year, the company recorded a net loss of $697 million, a decrease of $374 million year-on-year, and an Adjusted Ebitda loss of $230 million. dollars, a decrease of $253 million year over year.
In 2019, the company lost $674 million and recorded an Adjusted Ebitda loss of $253 million, compared to a loss of $17 million and an Adjusted Ebitda of $171 million in 2018.
Although Airbnb mentioned in its filing that it posted a profit in the third quarter, this was largely due to the measures it took towards the start of the pandemic: it cut its workforce by 25% in May, suspended the marketing and other expenses, and executive pay cuts. The company expects larger year-over-year declines in gross booking volumes in the fourth quarter of 2020 than in the prior quarter, as well as larger year-over-year increases in cancellations and changes.
As is becoming increasingly common among tech companies, Airbnb has three different share classes meant to ensure its founders can retain control. He also has a fourth class of stock which establishes a host endowment fund which he says is “designed to enable our guests to share in the success of our business.”
Airbnb joins a parade of recognizable startups that have gone public this year. The pandemic has put the IPO market on pause, but in recent months tech companies have taken advantage of investor appetite to bet on novelty by going public. They include cloud company Snowflake Inc. SNOW,
and game company Unity Software Inc. U,
while software providers Asana Inc. ASAN,
and Palantir Technologies Inc. PLTR,
went for direct listings. App-based delivery platform DoorDash Inc. filed its IPO prospectus last week, and online retailer Wish and kids’ game company Roblox Corp. are expected to submit their deposits soon.
